The City of London Corporation finds accents and parental status still determines career progression in finance. We are pleased to hear of a promise of a long overdue action to tackle it. For the banks to successfully tackle class prejudice boards must also learn that engagement and education are equally vital to good governance.
HM Treasury and the Department for Business, Energy & Industrial Strategy have commissioned the City of London Corporation (CLC) to lead an independent task force to boost socio-economic diversity in UK financial and professional services sectors.
The City of London Corporation recommends a Socioeconomic Diversity Taskforce to tackle class prejudice
The CLC’s report, published on the 29th of November, recommended the establishment of the Socioeconomic Diversity Taskforce and a sector-wide goal of at least half of senior leaders in the UK financial and professional services sector coming from a working-class or intermediate background by 2030.
The report’s research found that only 36 per cent of senior leadership positions were held by people from lower socio-economic backgrounds and that working-class employees progress 25% slower and earn up to £17,500 less than their peers.
Globally, the UK has one of the lowest rates of social mobility. “People from working-class backgrounds do not have access to the same opportunities as those from professional backgrounds, and those who are already economically advantaged tend to stay at the top,” says the report. The task force will review the targets in 2025 to ensure they are realistic.
David W. Duffy, CEO and co-founder of the Corporate Governance Institute, commented: “Diversity is not just a moral goal to ensure fairness and representation; it is an essential part of good governance. Only when a multitude of voices exist in the halls of economic or political power can we truly prepare for all outcomes.
Good governance needs to include engagement and education
However, business leaders and politicians are still forgetting a key element of good governance – perhaps the most important part: engagement and education. For too long, board members, directors, and executives get their positions because of who they are and who they know. This is the main reason for corporate failure; and there have been many examples.
“Business leadership should engage with real issues, not hold meetings on the golf course with eyes on the literal, and not metaphorical, ball. They also need to be educated on the topics that matter the most today, such as ESG and the environment, digital transformation, and cybersecurity.
“Otherwise, how can they understand, appreciate, and react to the potential and current threats to their stakeholders? This applies to anything – from a new form of ransomware to the climate crisis, which so many firms have been reluctant to effectively react to.
David concluded: “Good corporate governance is an essential part of well-functioning, liberal democracy. Engagement and education, as well as diversity and representation, are the safest ways to secure it.
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