ICSA calls for greater Government action to address gender pay gap

London, 2 August 2018 – ICSA: The Governance Institute has today welcomed the Business, Energy and Industrial Strategy Committee report on gender pay gap reporting, but advises that correcting and removing the gender pay gap is not the sole responsibility of companies.

According to Peter Swabey, Policy and Research Director at ICSA:

“The Committee took evidence from a wide variety of commentators, many of whom approach the issue of the gender pay gap through the lens of their own interests. One of the great challenges of gender pay gap reporting has been, as ICSA prophesised in our original consultation response that “a ‘single-figure’ gender pay gap statistic may be taken in isolation and treated as a proxy for ‘good’ or ‘bad’ corporate behaviour when the reality is that every company is different and there may be entirely acceptable reasons why some companies are an outlier from the norm. There is a real risk that special interest groups will use it as a lever to push their own agendas.

“Against that background, I believe that the Committee have produced a very good and, generally, well-balanced report and I am pleased that a number of points that we made in our submission seem to have been given due weight. My only caveat is that I would have preferred greater responsibility placed on Government rather than employers to take action to address the gender pay gap as I believe that this is an area where Government activity can have disproportionately greater effect than the actions of individual companies.”

The report makes a number of recommendations, including that:

  • The Government should extend the reporting requirements to more companies at a more granular level and require them to provide a narrative report alongside their published statistics, including an action plan to address their gender pay gap. 
  • The Financial Reporting Council should require improvements in the quality of gender pay gap reporting
  • The Financial Reporting Council should include reference to gender diversity throughout the company in the forthcoming revision of the Stewardship Code. 
  • Companies should include progress on reducing their gender pay gap in the key performance indicators for management

Swabey concludes: “The narrative reporting requirement is important. One of the most interesting – and most useful – results of gender pay gap reporting will be the ability to view it on an ongoing basis, comparing and contrasting each company’s changing position over successive years, what steps are being taken to narrow it and which of these have the more beneficial effects. The data which organisations are required to report is useful in quantifying their individual position, but the context, in terms of why the gap exists, where it exists in their organisations and what they are doing to reduce it is far more important. Responsible companies will want – and their investors will expect and require them - to do so to demonstrate that they understand the individual issues that they face. If organisations do not take steps to tell their own story, they cannot complain if others tell it for them.

“Correcting and removing the gender pay gap is not, and should not be seen as, solely the responsibility of employers and there is much that Government can and should be doing to effect cultural change in our society addressing, for example, the proper funding of child and elder-care and the cultural predominance of women taking responsibility for these, in many cases because they feel obliged to do so. But there is more that many companies can do. One issue reported by many companies is that, quite simply, they have fewer women in senior management roles. These organisations need to ask themselves why, and what they are doing about it. Evidence of the higher proportion of women in senior roles in the not-for-profit sector demonstrates that it is not just socio-economic factors that militate against female progression in the workplace. Maximising the use of the available talent pool in the UK makes great business sense.”

- Ends -

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Notes to Editors:

  1. ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With over 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance. Website: www.icsa.org.uk 

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