A diversity strategy is a commercial imperative - Susannah Donaldson

As businesses return next week from festive slumber, it’s an opportune time to consider how they can meet expectations on Diversity & Inclusion (D&I) matters in 2022.

The gender pay gap remains an issue

Some clients have expressed frustration at the lack of progress in terms of reaching their D&I objectives despite the substantial investment that they have made on related initiatives.

In particular, nearly five years on from the implementation of mandatory Gender Pay Gap (GPG) reporting, many clients are taking stock and are disheartened that their pay gaps have remained relatively static despite their best efforts.

Many businesses are undertaking an analysis of where their challenges lie (Brook Graham’s D&I maturity assessment tool can support this process) and are undertaking forecasting and modelling exercises to help inform decision making and the implementation of more targeted actions.

Susannah Donaldson, Legal Director, Employment law and D&I specialist at Pinsent Masons

You can’t change what you don’t measure, making the collection of diversity data collection not just necessary from a regulatory and procurement perspective, but an essential first step in the development of a meaningful D&I strategy.

Top talent, customers and clients are choosing to work for and do business with companies based on actual diversity credentials, and are increasingly expecting transparency above and beyond mandatory reporting requirements, like GPG reporting. Indeed, there is a growing trend towards reporting on a range of diversity pay gaps, including ethnicity, disability, sexual orientation and class.

The diversity data collection process is complex given the data protection considerations, and in the context of global data collection exercises, there are complex legal and cultural challenges to navigate. The data is only as meaningful as the data which employees are willing to volunteer, so the implementation of an effective comms plan is essential to drive up response rates.

Gender identity issues will continue to be in the spotlight and we’ve seen a rise in the number of trans-related Employment Tribunal claims and grievances. Clients are keen to ensure that their policies and procedures are worded effectively and that employees are equipped to deal with often sensitive situations.

There are some clear divergences between the Scottish and UK Government on wider policy issues, particularly with regard to the promotion of trans rights. For example, Holyrood’s decision to include a question on gender identify rather than a binary question on biological sex in the 2022 Scottish Census; and proposed changes to the Gender Recognition Act, removing the need for a medical diagnosis and lowering the “lived experience” time from two years to three months (with an additional three month “reflection period”).

However, employment law is not a devolved matter so there is limited scope for the Scottish Government to chart their own course when it comes to employment related protections.

Failure to comply with minimum legal requirements clearly exposes employers to potentially costly, time-consuming and reputationally damaging legal challenges, such as discrimination or harassment claims/grievances, however there are wider considerations beyond the pure legal risks.

We know that diverse businesses perform better against a whole host of metrics – profitability, shareholder engagement, innovation and talent attraction/retention to name a few. So implementing a comprehensive and ambitious D&I strategy is not just the right thing to do - it is a commercial imperative.

Susannah Donaldson, Legal Director, Employment law and D&I specialist at Pinsent Masons