On 22 March 2016, the Government launched a new charter to link City bonuses to the appointment of senior women. The charter is in response to a review by Jayne-Anne Gahdia, CEO of Virgin Money, into the representation of women in senior managerial roles in the financial industry.
The Gadhia review found that, in the UK, financial services female representation was around 23% on boards, but only 14% on executive committees. Amongst other things, the review recommended that financial service firms connect part of the remuneration packages of their executive teams to gender balance targets.
The Government’s charter asks financial service companies to implement four actions:
- Have one member of the senior executive team who is responsible and accountable for gender diversity and inclusion.
- Set internal targets for gender diversity in senior management.
- Publish progress annually against these targets in reports on their websites.
- Aim to ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.
The recommended actions are voluntary. However, Virgin Money, Lloyds Banking Group, Barclays, HSBC, the Royal Bank of Scotland, Columbia Threadneedle and Capital Credit Union have already indicated that they will be pledging their commitment to improve gender diversity in their firms. This is already an impressive list and the Treasury will publish a list of the firms who have signed up to the charter in three months’ time.
However, the Treasury has already indicated that if large sections of the industry do not engage with the recommendations, it may need to re-examine whether a more prescriptive approach is required.