The U.K.'s financial watchdog should introduce mandatory ethnicity pay gap reporting for financial institutions, say pension funds and money managers representing $118.8 billion in assets.
The group includes the more than £33 billion ($41.4 billion) National Employment Savings Trust, London, and pension fund pool Brunel Pension Partnership, Bristol, which runs about £38 billion on behalf of member plans.
In a letter to the Financial Conduct Authority responding to the regulator's consultation paper on diversity and inclusion, which was published in September, the group said the issue of low minority ethnic representation in the financial sector should be addressed through a mandatory disclosure of ethnicity pay gaps for larger employers. The ethnicity pay gap shows the difference in the average pay and bonus pay between ethnic minority employees and white staff across an organization.
The letter said some firms in the investment industry are already voluntarily reporting on these figures, including the Pension Protection Fund, London, and the FCA itself. "The process a company undertakes to report its ethnicity pay gap is a catalyst for further action," the letter said.
The group of 10 investors were convened by ShareAction for the letter.
"We are pleased to see the FCA taking action to improve diversity and inclusion in the financial sector," said Kohinoor Choudhury, senior campaigns officer at ShareAction, in a news release. "This is not just about fair pay, it is also about ensuring that our financial institutions adequately reflect the British society they are supposed to serve. The FCA should heed investors' call for ethnicity pay gap reporting to be mandatory, as a crucial first step to raising workforce standards across the sector."
Research by Willis Towers Watson's Thinking Ahead Institute in November found that just 2% of U.K. investment management professionals are Black/African Caribbean/Black British.
