CBI launches ‘Change the Race Ratio’ campaign

The Confederation of British Industry (CBI) today launched its 'Change the Race Ratio' campaign to increase racial and ethnic participation in British businesses. Working alongside companies including Aviva, Brunswick, Deloitte and Microsoft, the CBI is calling for businesses to set and publish clear targets for greater racial and ethnic diversity at the Board, Executive (ExCo) and ExCo minus one. Companies are invited to become signatories to Change the Race Ratio, which will launch officially at the end of this month.

As signatories to the campaign, companies make the following four Commitments to Change:

Increase racial and ethnic diversity among Board members: take action to set targets to achieve

• FTSE 100 – At least one racially and ethnically diverse Board member by end 2021.
• FTSE 250 – At least one racially and ethnically diverse Board member by 2024.

2. Increase racial and ethnic diversity in senior leadership

• Take action at ExCo and ExCo minus one to set clear and stretching targets and publish them within 12 months of making this commitment.
• In addition, establish a separate target for black participation at both levels.

3. Be transparent on actions

• Publish a clear action plan to achieve the targets and share progress in the Annual Report or on the company website.
• In addition, disclose ethnicity pay gaps by 2022, at the latest.

4. Create an inclusive culture in which talent from all diversities can thrive

• focusing on recruitment and talent development processes to drive a more diverse pipeline
• data collection and analysis
• fostering safe, open and transparent dialogue, with mentoring, support and sponsorship
• And working with a more diverse set of suppliers and partners, including minority owned businesses.

These commitments are in line with the recommendations of the Parker Review into ethnic diversity in UK Boards, published in 2016. Little progress has been made since then: at the beginning of 2020, an update to the Parker Review revealed “slow progress”: 37% of FTSE 100 companies surveyed do not have any ethnic minority representation on their boards. Change the Race Ratio aims to put that right and accelerate progress towards more inclusive and diverse British businesses.

Lord Karan Bilimoria CBE DL, CBI President, said: “The time has come for a concerted campaign on racial and ethnic participation in business leadership. Progress has been painfully slow. We want to do for racial and ethnic diversity what the 30% Club has done so successfully for gender equality”.

Richard Houston, Senior Partner and Chief Executive of Deloitte UK, said: “The energy of the Black Lives Matter movement has given a fresh sense of urgency around racial diversity in business. Change the Race Ratio aims to grasp this moment to create real and lasting change.”

Gideon Moore, Linklaters' Firmwide Managing Partner, said:

“There is currently a woeful lack of racial and ethnic diversity across company boards and senior leadership positions in UK businesses. We are proud to be partnering with the CBI and other leading organisations to launch Change the Race Ratio, translating statements of commitment to Diversity and Inclusion into action and accelerating change. Greater racial and ethnic participation at all levels of business is vital if we are to ensure that we have a truly inclusive culture in the world of work.”

About Change the Race Ratio

We are a group of senior leaders committed to taking action to increase racial and ethnic participation in our businesses.

Initiated by the CBI, Founder Business Partners include Aviva, Brunswick, Deloitte, Linklaters, Microsoft and Russell Reynolds. They are supported by Founder Civil Society Partners BITC, City Mental Health Alliance and Cranfield Business School.

We are campaigning to Change the Race Ratio, starting by setting targets for greater racial and ethnic diversity at the Board, ExCo and ExCo minus one. This must be accompanied by our commitment to publish those targets and our progress towards them, and the creation of a culture that enables diversity to thrive.

The Parker Review

The Parker Review into ethnic diversity in UK Boards was published in 2016, however, little progress has been made by businesses on implementing its recommendations. At the beginning of 2020, an update to the Parker Review was published, which revealed “slow progress”:

• 37% of FTSE 100 companies surveyed (31 out of 83 companies) still do not have any ethnic minority representation on their boards.
• Additionally, 69% of the FTSE 250 companies analysed by the Parker Review (119 out of 173 companies) have no ethnic diversity on their boards.

Evidence shows that more diverse organisations and boards make better business choices, exhibit greater growth and innovation, and carry lower risk. Research from McKinsey highlights that the business case for Inclusion & Diversity remains robust and the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. Data encompassing 15 countries and more than 1,000 large companies, highlights that in the case of ethnic and cultural diversity, top-quartile companies outperformed those in the fourth one by 36% in profitability, slightly up from 33% in 2017 and 35% in 2014.

The Parker Review highlighted that 75% of FTSE 100 revenues are earned outside of the UK, in markets which will include the nine countries, that will generate half of the world’s population growth between now and 2050 – five of which are in Africa and three in Asia. Lack of diversity may inhibit a company’s ability to engage effectively with global markets.

For these reasons, large investors are increasingly highlighting the greater need for ethnic minority diversity. For example, LGIM will start voting against FTSE chairs in 2022 if their boards haven’t met the Parker ethnic diversity targets.