This article was written by Sabina Mehmood, Product Manager, Gender-Equality Index at Bloomberg.
2020 was a landmark year for the “S’ in ESG (Environmental, Social, and Governance factors), and this International Women’s Day (IWD) comes at a pivotal time for parity and equality. The disproportionate effect of the Covid-19 working environment on women and people of color and the on-going call to action of the #blacklivesmatter movement are just two examples of many social challenges the world faces in the years ahead.
According to McKinsey, women’s jobs are 1.8 times more vulnerable to the impact of Covid-19 than men’s jobs. Women make up 39% of the global employment workforce, but account for 54% of overall job losses. Even before the pandemic struck, there was a growing need for investments in upskilling and training for more technical roles across organizations to account for the future of work. Where corporations were already missing the mark, Covid-19 has only exacerbated the need for more inclusive workplaces.
More than just the right thing to do, gender equality makes business sense.
Investor interest in ESG solutions is at an all-time high in significant part due to the uneven distribution of COVID-19’s wrath and the undeniable social issues plaguing our global community. In 2020, Shareholders approved 15% of key environmental and social proposals for the Russell 3000 – nearly double that of the prior year. Bloomberg estimates the $38 trillion of environmental, social and governance (ESG) assets under management in 2020 will grow to $53 trillion within five years, climbing to a third of the projected total global assets of $140.5 trillion by 2025.
Disclosure is the first step, but the data speaks volumes
Through the lens of the Bloomberg Gender-Equality Index (GEI) Reporting Framework, which aims to provide companies with a blueprint for understanding what they can be measuring in order to drive progress on gender equality in their workplace, disclosure of participating companies is at an all-time high. Over 460 companies across 45 countries have reported their FY19 gender data through the framework. These firms are driving accountability through data transparency.
Through comprehensive scoring of both disclosure and data excellence performance across five key pillars, corporates are able to understand their areas for improvement and benchmark against peers. The 380 index members scoring high enough to be included in Bloomberg’s GEI for the 2021 reporting cycle (FY19) represent 11 sectors and 50 industries across 44 countries and regions.
While the average disclosure score of index members is 94%, the average data excellence performance score of members is sitting at 55%.
The data speaks for itself. There is still work to be done.
Set the tone from the top, the bottom, and everywhere in between
Over the past five years, increasing diversity on boards has gained attention and for good reason. GEI companies with greater than 30% female board members, on average, have 7% more female executives than those falling short of the 30% mark.
As we look across all levels of an organization, however, female board seats may not have as drastic a trickle-down effect as we would like to see.
Among GEI members, the largest percentage of women in the workforce are in entry-level positions at 49% but those percentages become progressively thinner on the way up. With 36% in middle management, 28% in senior management, 21% at the executive level and 5% in the role of CEO, there’s still a crack in the pipeline. Even more interesting, the distribution of the pipeline across sectors is nominal – we really are all in this together.
Strikingly, while more female board members may correlate to more female executives, the relationship doesn’t necessarily translate to women in revenue-producing roles or the top 10% compensated roles of the company.
Investing in women in senior management shows the strongest correlation to women in revenue producing roles, strengthening the pipeline. But how is this accomplished? It starts with assessing factors beyond just representation metrics and holding companies accountable for progress.
While it is difficult to quantify corporate culture and inclusion, the GEI aims to tackle metrics which may correlate to this crack in the pipeline. Components like gender pay parity, inclusive policies and benefits, and anti-harassment policies all influence employee retention and development. Even how a brand is perceived by the outside world influences how that company attracts and retains talent. Progress is dependent on more than just the board.
IWD, 365 days a year
Transparency is critical to holding corporations accountable, but it is still a long road ahead. While International Women’s Day sheds light on how far we’ve come, and how far we’ve yet to go, inclusion must be ingrained in everyday lives and corporate values. It’s not enough to talk about gender equity one month out of the year. Corporations must hold themselves accountable for progress – and they’ll see the returns in more ways than one.