UK firms strengthen EDI governance as litigation and reputational risks rise

Asset managers in the UK are starting to treat diversity, equity and inclusion as an increased risk to their businesses, with legal and compliance teams playing more of a role in firm-wide initiatives according to the UK trade body the Investment Association. In their latest annual talent report they say firms are now treating DEI as a ‘standalone area of concern’ amid political pushback happening in the US under the Trump administration. 
 
Financial News reports on this with the headline ‘UK fund groups say DEI is a litigation and reputational risk’. The findings were based on a survey of 45 UK investment management firms employing around 29,000 people directly in the industry to understand how firms are building inclusive workforces, developing talent pipelines, and using data to inform their strategy, against a backdrop of rising investor scrutiny, regulatory focus and competition for skilled employees.

The findings suggest inclusion is increasingly being treated not simply as a cultural priority, but as a matter of governance and organisational risk and while the report focuses on financial services this is not confined to one sector. Highly regulated industries are often the first to recalibrate workplace strategy, but rarely the last.

So as workforce strategy comes under greater scrutiny, what does a legally robust EDI programme actually look like? And how can employers ensure their approach is grounded in evidence, aligned to business need, and capable of withstanding legal and reputational challenge? 

Kate Dodd heads up Pinsent Masons’ D&I consultancy Brook Graham and earlier she joined me by video link from Manchester to discuss this issue. So what makes an EDI programme legally robust? 

Kate Dodd: “First of all, is making sure that it's all evidence based and it's principles based. So for a business, they need to be able to say, look, we've not just bought this off the shelf. These are the problems that we have in our particular sector, in our particular working environment, these are the challenges that we're facing and try and base that on real world issues that are going to appeal to everybody. So everybody wants to feel that they're working somewhere that is fair to all people, that is consistent, that deals with things like creating a speak up culture, because it doesn't matter what your diversity is - we all know that we want to be in an environment where people feel safe to speak up, for example - so being really clear about the overarching purpose behind your policy, and behind your EDI strategy, is going to be absolutely crucial.”

Joe Glavina: “And, I guess, it helps to have a degree of flexibility built into it?”

Kate Dodd: “Yes, absolutely. Flexibility to talk to different people about things in different ways. So we often think about the need to have flexibility around different global locations, but also there needs to be a flexibility around who it is that you're talking to. So your manager programmes, for example, need to address the issues that managers deal with, and your all-employee programmes are going to be different in terms of the language that you're using, but also the messaging and the types of things that people are interested in. It's going to be much less about getting the best of your team, or managing people successfully, it's making sure that this all has real life day to day interest, and use, making this stuff useful to help people feel like they are going to be a better, stronger, manager, for example, is going to be really crucial, making sure you update it regularly so it feels relevant for the year that you are in. Then also, I suppose, probably the most important thing, is to make sure that whatever your EDI program is, that it's multifaceted, you're not relying too much on one thing. There’s no point just having a policy, you do need to make sure that you've got training around that policy but then, again, you don't just want one type of training. You don't want a kind of a day long training course that everybody does, you know, once every two years, or even only ever once and then they just go through the kind of click e-learning. What you need is to make sure that it's multifaceted, that it has got all sorts of different ways for people to experience those programmes and what we like is nudge programmes, the little things, even things like bias cards or a quick five-minute, ten-minute, video to watch before dealing with an appraisal, or a disciplinary for example, that reminds an employer, a manager, of what they need to do and also how they need to make it as fair as possible, for example specifics around dealing with somebody who is neurodiverse, for example. So, making sure that those programmes are accessible and are quick and easy for people to access.”

Joe Glavina: “Where do EDI programmes typically go wrong, Kate? What should HR watch out for?”

Kate Dodd: “The biggest thing that can go wrong, really, is the way that a programme lands. So you can sometimes get it completely wrong to the point where it's not legally compliant but I would like to say that's probably quite rare, particularly if you're using a reputable provider then it shouldn't be legally wrong, but you will often see something that is clumsy and it lands badly. People will often say things are a waste of time or that they didn't enjoy them. People are very time poor; we know that everyone's busy. So the fact of the matter is that making sure it lands well is going to be really important, and also making sure it's really interesting. So think about what you want to talk to people about and then think about what they want to hear and design something that does both. So for example, if you're teaching working with a group of senior men, using examples where the men are the baddies and the women are the goodies, you're just going to switch people off and you're going to make people feel that they are kind of being preached at or that they are the problem. So you need to be really careful about the examples that you use, you need to make sure that they are interesting, that they are relevant, and that that they feel up to date, if you see what I mean, because the other thing that you can have is something that feels pretty tick box, or something that feels quite too far – people saying, well, this has gone too far now. We have got a media that is moving to the right, we know we're in a political situation that is moving to the right and, therefore, you need to be careful not to fall into what people would just roll their eyes about and say, well, this is a load of kind of left-wing nonsense type thing. So making sure that the examples that you use, and the language that you use, is appropriate for everybody and it doesn't feel exclusionary for any group of people within your business.”

Joe Glavina: “What practical steps can employers take now to strengthen their EDI programmes against legal and reputational challenge?”

Kate Dodd: “Yes so refresh. I mean, ideally, do your review under legal privilege in order to be able to get a really good grounding and understanding of what is in your programmes at the moment and what might need to change. But then do it, as you say, with the lens of the new world, looking at where we are at the moment, being realistic about what your business is going to want you to do, being realistic about the stakeholders within your business. People will often be switched off by certain parts of EDI and, if so, you need to understand what they are. Is it even using the word diversity when people don't really understand what diversity is, or it's a word that is, perhaps shrouded in kind of alternative meanings, or shrouded in disagreement, for example – it shouldn't be, but it often is. There will be buzzwords sometimes that people will disagree on, or that might switch people off fundamentally, so keep true to what you're trying to do, take an ideological-based approach to things and say, look, these are our business or our organisational values, but how do we make this relevant? How do we make this interesting? How do we make it real world, so recognising generational diversity. There is such a wide range of people coming into the workforce now, people are working longer than ever. How do we make something that is going to be relevant and stay relevant for at least two to three years before you need to refresh it again because really that's almost the longest that you get, unfortunately, out of these types of programmes. So by real world, what I mean is thinking about everybody's perspectives and making it feel inclusive for everybody no matter where they stand on the political divide, no matter where they stand on things like immigration, all of these things that we know will be occupying the minds of employees across the UK when they're going into these types of programmes.”

Kate and her team are currently helping a number of clients to review their EDI strategy, covering legally robust programme design, privileged reviews and governance to help reduce risk and ensure initiatives land effectively. If you would like help with your then please do contact Kate – her details are there on the screen for you. 

- Link to Investment Association report