HM Treasury launched its Women in Finance Charter (Charter) in February 2016 following the publication of Jayne-Anne Gadhia’s review into the representation of women in senior managerial roles in the financial services sector (Ghadia Review). The aim of the Charter is to increase the number of women in senior leadership positions by getting signatories to commit to implementing key recommendations set out in the Ghadia Review.
So far an impressive 72 firms from across the sector have signed up, suggesting that increasing numbers of Chief Executives and Boards are taking the issue of gender imbalance seriously. HM Treasury is maintaining a list of signatories on its website which can be accessed here. The intention is to update this list every 3 months from October 2016.
What does signing up to the Charter mean?
Signatories commit to:
- having one member of their executive team responsible for gender diversity and inclusion;
- setting internal targets for gender diversity in senior management;
- publishing progress annually against these targets in reports on their website;
- having an intention to ensure that the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.
In addition to improving gender diversity at the most senior levels firms are also encouraged to set targets for a range of activities such as flexible working, recruitment, promotion or retention.
Firms which signed up to the Charter as part of the original cohort of 72 signatories have until 30 September 2016 to:
- appoint a member of their senior executive to be responsible and accountable for gender diversity and inclusion. There is no obligation to publish the name of this senior executive but details must be provided in confidence to HM Treasury;
- publish their gender diversity targets on their websites. Firms must also include some narrative text which explains why their firm has chosen these targets and how they can help improve gender diversity;
- submit a short confidential statement to HM Treasury to explain how senior executive pay is linked to delivery against internal targets on gender diversity.
These firms will then have 12 months to report on progress to HM Treasury and to publish details of their progress on their websites. Thereafter they will be expected to report on progress on an annual basis.
HM Treasury will publish an annual review on how the sector is performing against the Charter commitments. The first annual review will be published in December 2017. The annual review will evaluate the extent to which firms have met their Charter commitments, identifying areas for improvement and providing case study examples of best practice.
An impressive number of firms have already become signatories but the key question remains: will signing up to the Charter actually bring about meaningful change?
It will be interesting to see whether there are notable differences in the way that signatory firms approach the setting of gender diversity targets and what their aspirations are. How much information will they be prepared to divulge on their websites? Will the act of putting such information into the public domain act as a catalyst for change or will the regulators have to adopt a more prescriptive approach?
It remains to be seen whether firms which have not yet signed up to the Charter will face pressure from HM Treasury, the press and investors to do so.