Over 56 years after the Equal Pay Act was passed, women still earn as little as 49 cents to the average man’s dollar, and only 33 female CEOs are represented in the Fortune 500—an underwhelming 7 percent.
These figures are symbolic of a work landscape that often fails to equitably pay and promote the historically disadvantaged: women, people of color, minority communities and older adults, to name only a few.
Investors are noticing the deleterious effects of inequity in the workplace and are taking a stand for their bottom lines. As of press time, at least 99 investors have signed a “Workplace Equity Disclosure Statement,” demanding that companies release data about their diversity and inclusion policies and practices.
According to the shareholder advocacy group As You Sow, Equileap is sending the statement to over 3,000 companies across 23 developed market economies..
For the investors, currently representing more than $1.61 trillion in assets under management, the hope is to make better-informed decisions about their holdings. History has shown that companies that fail to attract and sustain diverse employees and leaders are riskier investments, meaning the return is not guaranteed.
Yes, a diverse and inclusive workplace is a happier workplace, but investors and companies don’t have to be altruistic to invest in equity.
Research from the consulting firm McKinsey & Co. shows that companies with gender and ethnically or culturally diverse leadership teams are significantly more likely to financially outperform their competitors. Additionally, being in the bottom-quartile of diversity means a company is 29 percent less likely to achieve above-average profitability.
In studying 17 leading companies, McKinsey found that more diverse companies are better positioned to attract top talent, to improve employee satisfaction, to secure their license to operate and more.
If diversity pays, aren’t companies catching on?
While many companies include the word 'diversity' somewhere in their mission statements or values, the reality is often lagging.
Most company executives want to bring in a diverse cohort, but they don’t understand the policies and practices that go into genuinely welcoming and sustaining underrepresented workers.
Data is essential. Employees who feel different don’t volunteer how they are thinking on their own. This concealment is called “identity cover” in the diversity and inclusion community. To compensate, companies must collect thorough, segmented data from employees to understand how to create an environment that works for everyone.
The unfortunate reality is that 400 of the companies on the Fortune 500 list share no data about the gender or ethnicity of their employees, and only 3 percent release complete data.
It is clear that companies are not yet taking diversity seriously as a tracked goal.
Even when it comes to gender alone, company policies are lagging, and transparency is found wanting.
According to Equileap’s report, Gender Equality in the U.S., American companies scored a C- on gender equality—a grade that is calculated based on 19 criteria, including categories such as paid leave for child care, compensation and work-life balance.
In the report, transparency was a problematic area. Many companies do not publish data on the health plans they offer, which makes it difficult to know what they provide for reproductive services and family planning.
Additionally, only one company in the S&P 100 Index publishes gender-segregated pay information.
If companies didn’t previously know to collect data about their practices and employees and to publish them, they should now. Investors have spoken; they can no longer ignore the impact of diversity and inclusion.
The investors’ Workplace Equity Disclosure Statement asks for access to information about policies and practices across federally-protected classes such as gender, race, ethnicity and sexual orientation.
Also in June, 72 CEOs signed an Equity Pledge, vowing to fill half of meaningful leadership roles with women by 2030. To aid in sustainable growth, companies are also committing to the Equity Principles that The Chicago Network—an organization of Chicago’s influential female leaders and the creator of the pledge—has defined:
Data is key to inclusion, and The Chicago Network will monitor the companies’ progress every other year over the next 10.5 years by collecting quantitative data, as well as anecdotal information about what’s working for female employees and what’s not.
That is just the tip of the iceberg for The Chicago Network’s aspirations to support female leaders.
The signers of the pledge currently include 10 public companies, 23 private companies, 27 nonprofits, 10 associations and two government entities. The Chicago Network will continue to invite companies to sign this year, with the goal of 100 signatories.
Are you a Chicago business? Take the pledge.
With a little nudge from investors (and even outside organizations and consultants) businesses can elevate their culture, programs and policies to be more inclusive—and more profitable.
Are you an investor interested in standing for diversity and inclusion? Sign up for the Workplace Equity Disclosure Statement.
Image credit: Christina Morillo/Pexels
Roya Sabri is a writer and graphic designer based in Illinois. She writes about the circular economy, advancements in CSR, the environment and equity. As a freelancer, she has worked on communications for nonprofits and multinational organizations. Find her on LinkedIn.