Social investment sector still plagued by lack of diversity

It may be a relatively new field, but social investment suffers from the same diversity problem that plagues many other industries, according to research published today.

Representation of female board directors in the sector has fallen by 5% since 2017, with women now making up 33% of boards, according to Inclusive Impact: A comprehensive review of diversity in the social investment sector. The share of executive level women on staff has however increased slightly, by 2% (bringing their share to 40%).

These figures place social investment organisations ahead of the general financial sector in terms of gender diversity, but ranking worse than the charity sector.

Almost one in five social investment board directors (18%) attended Oxford or Cambridge universities, compared to just 1% of the whole population. Black, Asian and Minority Ethnic (BAME) women are the least likely to be a board director, accounting for just 16 (or 2.8%) of the 571 directors identified.

BAME women are the least likely to be a board director

Inclusive Impact is based on a survey among 61 social investment organisations in the UK, one-to-one interviews, and observations of board meetings. It was written by recruitment agency Inclusive Boards and commissioned by Diversity Forum, a body launched in February 2018 to drive inclusion in social investment, with funding from the Connect Fund.

Meeting observations highlight that these tend to be led by men, who use assertive body language such as bold hand gestures and are more likely than women to use humour. Meanwhile their female colleagues tend to use more submissive body language – such as fidgeting with their hands – and are less likely to respond to open questions or to make direct eye contact with key speakers.

Such body language, write the report’s authors, shows there “is scope at all board meetings, investment committee meetings and team meetings to create a new culture for how the meetings are conducted.”

Seven percent of survey respondents considered themselves to have a disability or long-term health condition, compared with an estimated 16% of UK adults of working age who have some form of disability.

Interviewees frequently mentioned a lack of ‘disabled employees’ and limited access to offices in their organisations, according to the report, statements that “highlight the misconception of disability being limited to physical factors only.” Researchers noted that “some inclusive practices, including flexible and home working” are available, and this compares positively to the wider finance sector.

While the Inclusive Impact report does not draw any comparision with the social enterprise sector, the State of Social Enterprise Report 2017 found that 41% of UK social enterprises were led by women, significantly ahead of mainstream businesses. 12% of social enterprises were BAME-led. 

Bonnie Chiu, managing director at The Social Investment Consultancy (TSIC) and board executive of Diversity Forum, said: “2018 was the start of the #MeToo era and we saw a lot of progress for women. But this report highlights that progress towards diversity ebbs and flows. We cannot take progress for granted and the social investment sector needs more concerted efforts to achieve inclusion.”

The report’s authors make recommendations for the sector including:

  • Convening a special working group to standardise progression routes in investment roles
  • Ensuring individual organisations have plans in place to improve the overall diversity of their boards
  • Making sector-relevant diversity training available for all employees
  • Incorporating diversity metrics in investment appraisals submitted to wholesalers
  • Sharing and celebrating best practice examples
  • Requiring social investment firms to report on their gender pay gap

Today’s report follows a survey published by TSIC and Big Society Capital in 2017, among over 200 individuals at 32 organisations, which highlighted “a bleak picture” for BAME inclusion in the sector and “a clear drop off in women either transitioning or being hired into… decision-making levels.”

Diversity Forum, funded by The Connect Fund to improve diversity among social investors in the UK, has created a diversity champions peer network. Alongside today's report, Diversity Forum has also published a toolkit for organisations which covers recruitment, induction and training, monitoring and learning, influence and culture, and leadership.

The full report and toolkit are available on the Diversity Forum website.