The FCA is engaging financial firms and other stakeholders in a discussion on how it can accelerate the pace of meaningful change on diversity and inclusion in the sector. Its discussion paper Diversity and inclusion in the financial sector – working together to drive change (DP21/2) invites responses by 30 September. 

Here, Anna Lane, CEO of the Wisdom Council and president of Women in Banking and Finance, talks about the guidance in the paper and some practical steps firms can take to implement fair diversity and inclusion (D&I) practices.  Do you agree with DP21/2 that the discussion has been focused on gender? If so, why is this the case? It is true that gender has been a focus of the drive for diversity campaigners for longer, but it was probably a natural place to start given that women are a majority in the wider population and that gender cuts across so many other challenges. In the past few years, I would argue that firms have tried to broaden the scope of diversity programmes to include ethnicity, sexuality and disability for example. It may be that the regulator sees less evidence of progress in some of these areas and that this is what the consultation paper is calling out. Our hope is that we can apply what we have learnt from the work done around gender equality and accelerate change across the diversity agenda.

What are some areas of the employee lifecycle that firms should be looking to improve, and how can they take steps to improve upon them? The employee lifecycle challenge is one that we are only too well aware of at WIBF. Our ‘Accelerating Change Together’ research into what has been termed the ‘missing middle’ finds that many women in the sector are frustrated by what they see as an opportunity gap – they have not been given the same chances as male colleagues to progress. Very often firms could be improving D&I by looking at career progression for their existing employees and understanding more about the dynamics at play. Middle managers have a crucial role to play here – are they upholding the firm’s cultural values in their day-to-day decision-making, or the way they motivate their teams? Ensuring that firms adopt policies to promote equality of opportunity along the employee lifecycle is the key here – whether we are talking about graduate trainees or senior managers with board potential.

What are the challenges of measuring inclusion?There's a lack of data and it’s fraught with complexity. Some of the data firms might want to capture for measurement purposes could be highly personal in nature. There are significant challenges to overcome, for instance, in asking someone for permission to capture their sexuality. There are also cross-border challenges for multinational firms in that the data they are allowed to hold on employees can vary between jurisdictions. Looking beyond data, there are also a lot of softer drivers of an inclusive culture that can be harder to quantify.

How can firms work better to collect and report on their D&I data? What types of data should they collect, and what would be the benefit?I’m not sure we have all the answers on this one yet. Culture can be seen as a nebulous concept and some firms shy away from tackling culture because it is ‘too hard to measure’ and, therefore, hard to chart and demonstrate progress. However, there are ways of thinking about D&I, equality of opportunity and (by extension) culture that do lend themselves to mapping and measuring. So, for example, who are your new starters, where are they coming from? Who’s been promoted? Who’s had the pay rises and the really exciting project opportunities? Who’s leaving and why are they leaving? And then of course, qualitative measures, including staff surveys and social media and investors’ feedback that will help you build a coherent narrative on your company’s culture and how inclusive you are.

What are some challenges firms might face when collecting data on diversity? It is a massive challenge – how do you protect anonymity for people, especially when asking questions that could be deemed deeply personal? This becomes more problematic as you move further into the intersectionality space. It extends beyond issues with hard data too. It is also about ensuring employees feel comfortable reporting instances where they have felt discriminated against, for whatever reason. When feedback concerns specific minorities, it could become pretty obvious who those individuals are – and this makes it very difficult to be open.

Do you believe there is a connection between a lack of diversity and financial misconduct? The FCA talks a lot about echo chambers and there have been some well publicised instances in financial services where dominant business leaders have fallen into the trap of recruiting like-minded boards. From a risk management point of view, it makes sense that a diverse cohort of minds will make better decisions. It is about developing an inclusive culture that allows boards to work effectively – open cultures should give rise naturally to deep mutual respect, a willingness to accept constructive challenge and the ability to forge ideas (and call out risks) through debate and collaboration. And this isn’t just about boards – at every level in an organisation, employees should feel that their voice will be heard.
About the expert
Anna Lane is president and CEO, Women in Banking and Finance, and founder and CEO of The Wisdom Council. She is committed to promoting a sustainable financial services industry that champions gender equality and a duty of care to look after customers – and have a positive impact on society.

Anna is also a member of MAPS UK Financial Wellbeing Strategy – Gender and Financial Wellbeing Challenge Group and of the British Association of Women Entrepreneurs.

How does a culture of psychological safety help foster inclusion? We talk about this a lot at WIBF with our good finance framework, which highlights the actions that a company can take to ensure that they retain and develop their most talented employees, including women. Groupthink is an issue. In our survey, there was an acknowledgement by several women interviewed that the problem of not being heard was also shared by other colleagues whose ‘face doesn’t fit’, including introverted men. One stand-out that underlined to us that this isn’t a one-dimensional issue was that eight women interviewed and who identified as black, described being disregarded in meetings and puzzled over whether it was attributable to their gender or their race. So this isn’t just about making teams look more diverse on paper, but also curbing groupthink and ensuring that all voices are heard in meetings, which can help both the firm and women progress.

• Ask the experts: Speaking up/whistleblowing and psychological safety

How can firms make sure their D&I policies are in line with their environmental, social and governance (ESG) objectives?

The Wisdom Council recently held a webinar on culture and D&I and the whole area of ESG and links to D&I policies was a hot topic. The growth in importance of ESG factors will undoubtedly shine a light on how firms measure up in terms of their own D&I policy. Firms need to have a clear idea of their own stance on ESG and how that feeds through into their D&I responsibilities, both in their role as corporate entity and employer, and in their wider role across the industry value chain. This is a particularly acute issue for any financial services firm that promotes ESG-related products or applies ESG or sustainability criteria to firms they work with or invest in. Are they confident they would pass their own ESG screen?