How to ACT Guidance Pillar 2 : Transparency

Firms will have noticed the increasing demands and desire for data on many aspects of business in relation to diversity and inclusion. This extends across teams, and includes those in revenue-generating roles as well as back office.

There are some areas where data collection is more established, for example gender pay gap reporting; others that are emerging in prominence, such as ethnicity pay gap reporting; and some that are not yet established, but where work on business case is underway, such as socio-economic background.

Having a regular set of reporting helps to show the overall baseline and direction of travel. Putting this data into context of what the firm is undertaking and aiming to achieve is therefore of high importance.

The first practical step in any data collection process will be a landscape review of what data is available to collect and what processes can be documented. However, there is a higher-level element that needs to be clear, which is the purpose of the exercise. It should include what the data will be used for, as well as what it will not be used for.

Data, of course, helps to demonstrate whether targets are being achieved. But if the target is not obvious, or looks inauthentic or unrealistic, employees will find it harder to buy in. Therefore, creating the narrative for staff on why the process is necessary and important is a significant preparation element for collecting data.

The narrative around targets can become more developed over time through iteration. However, there must also be a culture of openness that flows from the business to employees. This becomes imperative if the business is to ask staff for sensitive, personal data. The company has to set the tone.

Existing initiatives such as Women in Finance have a structure for disclosure of data that may be helpful to use as a model across other areas. Companies that are taking positive action in this area can also embrace the development of transparency and disclosure expectations in various arenas. For one, regulation is moving steadily towards increased disclosure requirements, for example the 2021 FCA consultation.

The business may find there are differences in comfort and approach across parts of the business and across certain demographics. For instance, younger employees are often more comfortable sharing information with each other, such as on pay and progression, which was previously rarely done.

It is understandable that companies are less comfortable with the data collection and disclosure element. Concerns can range from external exposure, to challenges from employees, or a lack of direction on how to address data gaps and issues that are highlighted by the process, which can feel difficult to address.

In fact, firms often find that the impetus that causes action to be taken internally comes from an external stakeholder. This can provide a catalyst for action from senior level, even where there has been significant internal discussion but limited practical progress.