A lack of diversity in Europe’s top financial services boardrooms is deterring investors from backing firms, new research has revealed.
While boards across the continent boast strong credentials in politics, finance, accounting, and compliance, a majority of firms do not have the gender representation needed to make them an attractive investments, according to a new Boardroom Monitor report from big four firm EY.
Forty-four per cent of investors surveyed by EY said gender diversity in the boardroom “significantly influences” their decision to invest in a financial services firm, but the current gender split across all firms stands at 63 per cent male and 37 per cent female.
Anna Anthony, managing partner of UK financial services at EY, said boosting board diversity was crucial to UK firms that wanted to tempt in investors in the coming years.
“It goes without saying that – although it is improving – boardroom diversity is an area where significant work still needs to be done,” she said.
“With two-fifths of firms yet to meet the FCA’s proposed target of 40% women on boards, and three-fifths without any board members under 50, the UK’s largest financial companies are not as advanced as some peers across the continent, although movement is positive, with an increase in female hires in the last few years.”
She called on UK firms to make a “concerted effort” to improve gender diversity at the top and “show leadership at a global level”.
Sustainability expertise also proved a major draw for investors, with 51 per cent saying they believe boardroom experience in sustainability has a ‘significant’ impact in terms of making a company an attractive investment.
The news comes as fresh data from PwC warned that the UK gender pay gap may continue for another 100 years if the current slow rate of progress continues: a 0.5 per cent reduction over five years.
On average, women in the UK earn 87p for every £1 men earn, and the ongoing gaps between bonuses continue to buffer this.
The national average (mean) gender pay gap is now 12.9 per cent (down 0.3 per cent from last year), the national average (mean) gender bonus gap is 32.5 per cent.
Commenting on the analysis, PwC UK Diversity and Inclusion Consulting Director Katy Bennett told City A.M that the gap was particularly stark in London, with financial services having some of the highest pay gaps across all sectors.
“The gender pay gap is now higher in London than anywhere else in the UK according to the Office of National Statistics. The same is true of the ethnicity pay gap. This reflects the diverse mix of jobs and industries within the capital, where significant work is still required to address inequalities, including persistent pay gaps.
In banking, the gender pay gap is 28.9 per cent, while in investment management it is 25.7 per cent – more than double the national average of 12.9 per cent.
“As much of the UK’s financial services industry is still concentrated in the City of London, it will undoubtedly be affecting the city’s overall gender pay gap”, she told City A.M.
“Pay gaps have serious, real-life repercussions in the current cost of living crisis. In London, where living costs are high, women earning less than their male counterparts will be paying a higher percentage of their salaries on the same goods and services. Pay gaps are felt not just in the short-term but will be compounded through the knock-on impact to women’s pensions, investments and other long-term savings – exacerbating inequality into retirement.”