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Our Insights 25 Feb 2015

10 Trends for 2015: Disclosure on Corporate Diversity – Moving Beyond Gender

By Rida Bilgrami

Apple CEO Tim Cook’s public coming out in 2014 highlighted the issue of LBGT workplace discrimination. Image © CC Mike Deerkoski

For over 25 years, companies have valued our ability to serve as their early warning system—to interpret emerging issues and trends in the sustainable development agenda and help them anticipate, understand, and respond to shifts in the business landscape. Our Ten Trends for 2015 series distills SustainAbility’s thinking over the past year and forecasts the issues that will shape the sustainable development agenda in 2015. This is the second in our series of blogs expanding upon these trends.

While gender diversity continues to frame the narrative on diversity within a company’s workforce, stakeholders and companies are shifting their focus to more holistic interpretation. This includes fostering other dimensions of inclusion such as race, ethnicity, sexual orientation and disabilities.

In 2014 a number of tech companies including Yahoo, Google, Facebook, Twitter and Amazon publicly disclosed their diversity figures, bringing attention to the underrepresentation of women and ethnic minorities in the industry. While the tech industry has lagged behind other industries on the diversity front, the rise in disclosure of diversity data by these companies signals that, beyond examining their environmental and social impacts, these companies may be turning an inward lens onto their own workforce. A recent article in the Harvard Business Review posits that with various reporting frameworks and guidelines promoting improved non-financial reporting, significant insights will come from human capital reporting to provide investors and regulators with information on how companies create value over time.

Disclosure of the diversity gap is a vital first step in recognizing a problem exists. However, what requires further analysis is how disclosure is driving performance changes and creating more inclusive workforces. The fact that Tim Cook, Apple’s CEO, made headlines and brought visibility to the issue of non-discrimination in business reflects that companies still have a long way to go to make diversity—in every sense—a reality within their organizational DNA.

The shift in framing diversity beyond gender is evident in a number of developments last year. US Civil Rights activist Jesse Jackson launched a campaign drawing attention to the lack of racial diversity in the executive ranks of top-tier Silicon Valley firms. The Open Diversity Data project publicly called out tech companies that do not release diversity data. In the UK, Business Secretary Vince Cable launched a review of the number of ethnic minority board members following reports by Green Park Executive Search and Business In The Community highlighting the lack of ethnic diversity at the board and executive levels as well as in management positions in FTSE100 companies. KPMG UK released a detailed set of diversity targets for 2018, across the areas of gender, ethnicity, disability and sexual orientation. Channel 4 in the UK announced a new diversity charter that allows bonuses to be withheld from senior management and other staff if they fail to meet targets including a 6% LGBT workforce.

In 2015 we hope to see more transparency on diversity outside of the tech sector as well as greater articulation by companies about what diversity means to their business. As has been noted in Deloitte’s research on diversity of thought, beyond ensuring women in leadership positions, ultimately, high performing organizations need broader representation across society to ensure the diversity of thought that drives innovation.

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