Gender inequality at a crossroads as women are hit harder by COVID-19
As companies struggle to preserve diversity and inclusion progress and build back better post-COVID-19, CDR’s Head of Investor Relations, Sandra Novakov, highlights the related reputational risks and opportunities for 2021. (This article was originally published in The IR Society’s Informed magazine)
One unwelcome side-effect of the pandemic has been the regressive impact on gender equality of the dramatic shift to homeworking and changes to social structures.
COVID-19 has exposed or worsened deeply entrenched gender inequalities, making diversity and inclusion (‘D&I’) a critical issue for corporate reputation. And not only for reputation, as workforce diversity is increasingly recognised as beneficial to corporate decision-making and efficiency.
In response to the outbreak, enforcement of gender pay gap reporting in the UK was waived for 2019/20 to allow companies to focus all efforts on managing the crisis. However, once reinstated, 2020/21 reports may reveal a bleak picture.
Women disproportionately hit by the pandemic
According to McKinsey, while women make up 39% of the global workforce, they accounted for 54% of job losses resulting from the pandemic. To make matters worse, their recent research highlights the detrimental effects of the crumbling support systems even on those whose jobs remain unaffected, leaving women to shoulder the lion’s share of domestic responsibilities and family care.
As a result, one in four women have or are considering downshifting their career or leaving the workplace early. All the while, men with children working from home are being promoted at a higher rate than women in the same situation, with 34% receiving a promotion compared to just 9% of women, according to an August study by software company Qualtrics and the Boardlist, which focuses on gender parity in the boardroom.
D&I: a key ESG issue for 2021
Alarmed by such developments, gender equality advocates have launched campaigns for governments to address the issue by providing tailored stimulus packages aimed at supporting women specifically, highlighting the detrimental effect that doing nothing will have on the global economy.
Come the next AGM season and the publication of 2020/21 gender pay gap or sustainability reports, investors will be looking for signs of management proactivity to avoid erosion in progress made against D&I targets before the pandemic. Those thought to be doing nothing, paying lip service, or doing too little, may not fare well under shareholder and media scrutiny.
While the all-too-frequent trading updates during 2020 have featured employee health and wellbeing as a priority, how many companies have so far detailed actions taken to preserve diversity?
For those management teams hoping that social issues have slipped down investors’ agenda in the current environment, our own research brings bad news. Of the 377 investor relations officers (IROs) polled by Citigate Dewe Rogerson, 79% report an increase in ESG-related questions from investors in 2020, while 67% note an increase in investor focus on social issues in particular.
Opportunity to build back better
As 2020 draws to a close, with the UK approving the first vaccine, there appears to be, at last, light at the end of the COVID-19 tunnel. With ‘building back better’ firmly on the public agenda, changes are expected across all sectors of the economy.
Management teams are eager to demonstrate that positive and long-lasting lessons have been learnt as a result of the crisis and the actions taken to make their businesses more resilient to future disruption. In these future-proofing efforts, diversity of thought will play a key role.
And in every crisis lies an opportunity. Responsible employers with a long-term vision will look to leverage the widely expected shift to permanent flexible working arrangements post-COVID-19, for both men and women, to build a more inclusive workplace. As part of these efforts, we expect such companies to review their hiring and promotion practices, increase opportunities to reskill and adjust their approach to compensation in line with their values.
Excellent ‘ESG credentials’ are increasingly seen as a way to achieve differentiation from investment peers. Showing an improving trend in D&I at a time when the market as a whole records its worst decline in equality in recent history will certainly provide an opportunity to stand out. As conduits of information between boards and the investment community, IROs have a responsibility to ensure their leadership teams are focused on both the risks and the opportunities they face.