s the Covid-19 crisis shakes the corporate world, Britain’s biggest companies are undergoing profound changes. The Black Lives Matter movement has shone a separate light on the lack of diversity in many corporate structures.
In this period of disruption, businesses are examining their responsibility to society more closely than ever. And perhaps none more so than the food retailers. Sainsbury’s CEO, Simon Roberts, has doubled down on the supermarket’s commitment to customer and employee safety, backing this up with bonuses for 157,000 staff in recognition of their efforts to continue providing a vital service for their local communities.
The latest release of Tortoise’s Responsibility 100 Index, a unique ranking of the FTSE 100 on their commitment to key, social and ethical objectives, shows there is much progress yet to be made.
Perhaps most strikingly, our data shows that only nine FTSE 100 companies report on BAME representation at senior management level. Of those, only three report on the BAME pay gap. In contrast, all FTSE companies report on the gender pay gap: because they are obliged under law to do so.
Updated every quarter, the R100 Index uses more than 10,000 data points from roughly 200 publicly available sources to track FTSE 100 companies and to measure the difference between their promises on sustainability and the actual actions they take.
We hope it will prove a key tool to measure how companies respond to the Covid-19 crisis going forward. Today’s update is based primarily on data relating to a pre-Covid period, including a slew of 2018-19 annual reports released in April and May. But it will set a valuable benchmark to measure corporate change in future.
For now, however, these are the main findings of the quarterly update to the R100. Of the 61 companies that have released reports since March, we found that:
- Out of the few companies reporting BAME representation at the senior management level, none made any significant progress in improving representation of black, Asian and minority ethnic groups among their overall workforce. In fact, just one company – BP – reported an increase in ethnic diversity at senior manager level.
- Phoenix Group, the insurance provider, saw a significant drop in its ethnic diversity, with BAME employees making up 16 per cent of their workforce in the year before, but just 5 per cent in their most recent report.
- 31 per cent failed to decrease their emissions since the previous year, where “emissions” is defined as the combination of direct (known as “scope 1”) emissions and indirect (“scope 2”) emissions from energy use. This said, as a group, the 61 companies cut their greenhouse gas production by 39 million tonnes, with an average decrease of 11 per cent since the previous year.
- 12 companies increased their proportion of electricity from renewables. As a group, the average proportion of electricity from renewable sources for these 61 companies increased from 67 per cent to 78 per cent over the course of a year.
- Half have improved representation of women at senior management level, with the biggest improvements at Tesco, Melrose Industries, the turnaround specialist and Taylor Wimpey, the housebuilder. Together, the 61 companies improved the average proportion of women as senior managers from 27.8 per cent to 28.7 per cent.
- Every company reporting on charitable contributions gave more this year compared to the year before according to their annual report. The average annual charitable contribution per company increased from £35.5 million to £38 million.
- Employee satisfaction – a measure that is calculated via yearly surveys – rose from 75 per cent to 80 per cent, with voluntary turnover correspondingly dropping from 15 per cent to 13 per cent. Notably, though, these employee surveys all took place before the coronavirus pandemic took hold.
The ranking found that the best performing companies included Unilever, the consumer goods giant, Severn Trent, the water company, Diageo, the spirits maker, and AstraZeneca, the pharmaceutical company. When compared to the previous edition, many of the top companies retained their position, with Unilever maintaining its spot at first place.
One of the most striking takeaways is the stark difference between what companies say they do versus what they actually do – or, in other words, the gap between their talk and their walk. Talk scores highlight the amount that companies talk about issues surrounding responsibility, while walk scores measure the more tangible actions that companies take.
We found that the company with the greatest gap between “walk” and “talk” was Coca-Cola Hellenic Bottling Company, the company that makes the bottles for Coca Cola, which ranked 4th place for talk and 58th for walk – a total gap of 54. Next in line was mining company Antofagasta, with a talk rank of 35 and a walk rank of 89.
The Index methodology is guided by United Nations’ 17 Sustainable Development Goals, which were introduced in 2015 “to achieve a better future for all” by 2030. These remain ever-relevant, but with companies in the midst of a major disruption, there are inevitably some new questions to be asked around the meaning of corporate responsibility and how companies should be held accountable in this new era. This is something that we will develop in the upcoming editions of the index.
The quarterly update coincides with the recent reshuffle of the FTSE 100, which led to four companies dropping out of the index, namely the budget airline EasyJet, cruise operator Carnival, British Gas owner Centrica, and engineering firm Meggitt. Taking their spots are gambling company GVC Holdings, software provider Avast, emergency repairs firm Homeserve, and the retailer Kingfisher.