By Nina Wilkinson
The objective to “leave no one behind” is a universal value of the UN Sustainable Development Goals (SDGs) and is integral to achieving its 17 calls to action. Reduced Inequalities (Goal 10) specifically addresses income and social inequalities and promotes equal opportunity and inclusion of all, “irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status” (SDG 10.21).
Although significant challenges remain, progress towards gender equality has been possible due to the coordinated pressure in corporate and political spheres, and a convergence of definitions and goals. A focus on diversity beyond gender has historically been unchartered and uncomfortable territory for many, however companies tackling the issue are doing so not solely because it’s the “right thing to do” but because of the substantial benefits to company value2.
The case for better cultural diversity
Australian case study
Medibank is one of the largest private health insurers in Australia providing access to quality essential health-care services to ~3.7 million customers. Medibank is a significant employer in Australia with ~4,000 employees. Medibank is one of a handful of Australian/NZ-listed companies that disclose the diversity of its workforce by ethnicity / background and disclose that 22% of their extended leadership team identify as being from a non-Australian, New Zealand or British background.15 Melior views this as a positive first step and will be engaging with and advocating to Medibank to extend this disclosure and set targets for the broader diversity of its board beyond gender.
Source: Medibank Sustainability Report 2020
International case study
Microsoft Corporation (US listed, not owned by Melior) disclosed in 2020 that three of the twelve members of its board of directors are racial or ethnic minorities. The company also discloses the 5-year progression of gender and ethnic workforce representation across its global and US businesses respectively.18
In January 2021, State Street Global Advisors, the world’s fourth largest asset manager,19 has committed to vote against the Chair of the Nominating and Governance Committee of any portfolio company in the S&P 500 or FTSE 100 that (a) does not disclose the racial and ethnic diversity of its Board of Directors by 2021, and (b) does not have at least one director from an underrepresented community by 2022.20
Source: Microsoft Corporation Diversity and Inclusion Report 2020
Melior has established 6 strategic absolute targets for companies in our sphere of advocacy to achieve by 2030 which will be discussed in detail in our soon-to-be-released 2021 Annual Impact Report . One of these targets relates to board diversity. Currently, basic data disclosure, let alone ambition from targets, on other dimensions of diversity besides gender is extremely limited. We believe that companies should disclose the self-identified diversity of their boards beyond gender, and target (at a minimum) one director who self-identifies as an underrepresented minority based on dimensions such as ethnicity, age, disability, religion or LGBTQ+ by 2030.
We have not been able to find any Australian companies that disclose the diversity of their boards beyond gender. We understand that our target is aspirational and may evolve over time as we actively explore broader diversity further. We feel however that it is important to begin engaging with Corporate Australia on this topic and extending the diversity focus beyond gender.
NB: We interchangeably use the terms racial, ethnic, and cultural diversity, which we have done deliberately allowing for the complexity of the subject and admitting that narrow definitions of ‘otherness’ can be problematic when imposed, are not always clear-cut in an Australian and New Zealand context which interplays historical impacts of First Nations peoples, colonisation, immigration and globalisation. We acknowledge the distinct differences of each term, particularly with ‘culture’ often used as an umbrella term encompassing race, ethnicity, religion, language and/or social class.
3 Watermark 2021 Board Diversity Index, https://www.watermarksearch.com.au/2021-board-diversity-index
5 https://www.theguardian.com/australia-news/2021/mar/03/nearly-one-in-five-chinese-australians-threatened-or-attacked-in-past-year-survey-finds ; https://interactives.lowyinstitute.org/features/chinese-communities
9 EBIT means Earnings Before Interest and Tax, https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters
14 Diversity Council Australia/University of Sydney Business School (R. D’Almada- Remedios, D. Groutsis, A. Kaabel, and J. O’Leary) Counting Culture: Towards a Standardised Approach to Measuring and Reporting on Workforce Cultural Diversity in Australia, Sydney, Diversity Council Australia, 2021.
16 Racial Discrimination Act 1975 (predates Sex Discrimination Act 1984, Disability Discrimination Act 1992, and Age Discrimination Act 2004).
18 Microsoft Corporation Diversity and Inclusion Report 2020; https://aka.ms/2020DIReport
19 By Assets Under Management (EUR 2.8tr as of 31/12/2020), according to IPE magazine, https://www.ipe.com/reports/top-500-asset-managers-2021/10053128.article
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