Research reveals decline in UK financial services’ diversity efforts

UK financial services CEOs are focusing on cost cutting rather than improving diversity, according to a new report from campaign group Reboot. The report finds that over two-thirds of financial services employees say that their employer’s current state of ethnic and racial diversity efforts has not changed or has declined compared to two years ago. The research, Race to Equality: UK Financial Services 2024, reveals that funding is being reduced and diversity, equity and inclusion (DEI) programmes are being decommissioned as CEOs prioritise cutting costs rather than focusing on improving diversity. The report found that employees believe their CEO should be doubling down on diversity, with six in ten (61%) feeling that if top level leaders took significant action to address racism it would have a considerable positive impact on the culture and ultimately on the bottom line. Nearly half (48%) of employees suggest that one of the main reasons CEOs are not taking sufficient action to address issues is a lack of understanding about the severity and impact of racism. Four in ten (42%) respondents stated that budget cuts are the biggest contributing factor to slowing down or silencing efforts. In addition to this, nearly a quarter (22%) have experienced reduced funding for diversity programmes and more than a quarter (26%) have seen an elimination of diversity-focused roles over the last two years. Organisations are trying to create a diverse culture for everyone to speak up, with almost two-thirds (58%) saying that their companies actively encourage employees to inform change and build an ethnic and racially inclusive culture. Yet nearly half of respondents (44%) say they felt pressure not to advocate for ethnic and racial equality in their workplace, and four in ten (42%) say they have to be cautious when they advocate, the research found. Ethnic minorities feel more pressure to stay silent (45%) compared with their white peers (35%), though both groups express concerns about retaliation. Overall, nearly half of respondents (46%) have experienced pressure not to discuss diversity issues and four in ten (39%) experienced muzzling of diversity advocates over the last two years. Noreen Biddle Shah, founder, Reboot, said: “This year’s report highlights a stagnation in race sentiment since Reboot was launched four years ago. Even more concerning is the growing trend of employees feeling pressured to remain silent on issues of racial and ethnic diversity. Many fear repercussions if they speak up.” She added: “A real example is that not one of our senior ethnic minority ambassadors was allowed to share a quote in response to this year’s research. This is because DE&I has been institutionalised and less about the individual, but more aligned to the company and its agenda. Four years ago, getting ambassadors to externally speak up was not an issue at all – but that’s because the corporate narrative at that time was more supportive due to the hype around BLM.” When looking at recruitment, diversity efforts have improved across all levels in organisations, with nearly three-quarters (74%) stating that their organisation is seeking to be more ethnic and racially diverse when hiring. However, half of the report’s respondents (55%) say that their skills and talent are being overlooked and nearly two-thirds (59%) feeling that their identity or background has an adverse effect on the opportunities they are given. This has increased drastically from two years ago when just a third (29%) felt the same way. In this year’s Reboot Financial Services YoY index, which is based on data on employees’ perceptions of their company’s DEI progress, the average score for financial services has increased back up to 66.2 out of an optimal 100 (from 64.8 last year) but this is still only at 2022 levels, said Reboot. The driver of this increase is the representation of diverse employees in the pensions sector, which is up from 64.4 to 67.9, but there has been a notable decline in the hedge funds, wealth management and banking sector this year.

Research reveals decline in UK financial services’ diversity efforts

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