During the pandemic, the government changed the law so that companies no longer had to publicly disclose the difference between what they pay men and women. The latest update of Tortoise’s Responsibility100 Index reveals how 2020 changed the FTSE 100
2020 was undoubtedly a remarkable year – one shaped by both a global pandemic, which required governments to shutdown economies in order to save lives, and a reckoning on racial justice, catalysed by the murder of George Floyd on 25 May.
Twice a year, Tortoise ranks the UK’s 100 biggest listed companies according to their sustainability “talk” and “walk”; the things they say they are going to do and the actions they actually take.
The latest update of the Responsibility100 Index – its sixth version, which was released today – shows that UK’s biggest listed companies were not immune to the transformations taking place around the world.
Nine companies in the FTSE 100 stopped reporting on their gender pay gap during the pandemic, after the UK government temporarily paused their legal requirement to do so.
Since 2017, companies with over 250 employees have been required under UK law to publish data on their gender pay gap. In the 2018-2019 reporting year, nearly all of the FTSE 100 companies – 81 per cent, to be exact – reported gender pay gap data for at least one of their subsidiaries.
Then Covid-19 happened. In March 2020, the UK government paused reporting requirements due to the “unprecedented uncertainty and pressure” of the pandemic. Mandatory reporting is set to resume from October 2021 – but in the meantime, many companies have chosen not to disclose these figures.
During the 2020-2021 reporting period, just 57 companies sent gender pay data to the UK government. This compares to 73 companies in 2019-2020, and 81 in 2018-2019. Thirteen FTSE 100 companies have never reported any gender pay figures at all, because they either have subsidiaries with fewer than 250 employees or subsidiaries abroad, where there are no legal reporting requirements.
The companies that stopped reporting their gender pay figures since the reporting break was introduced one year ago include fashion retailers JD Sports and Next; food delivery company Just Eat Takeaway.com; and airline holding company International Airlines Group, which owns British Airways. They have published no data across any of their subsidiaries, missing the government’s recommended (but no longer enforced) April 2020 and 2021 deadlines.
The data that is available this year suggests the pandemic has increased the gender pay gap between women and men working for FTSE 100 companies.
On average, FTSE 100 companies have seen an increase in their median gender pay gaps of 0.5 percentage points since 2019, from 19 to 19.5 per cent. These figures are well above the UK average of 15.9 per cent.
Covid may have had an impact. Before the pandemic, women were more likely than men to work part-time, on temporary contracts and on zero-hours contracts. The Institute for Fiscal Studies says that women were more likely to be working in sectors that were shut down during the UK’s first national lockdown, and research from King’s College London showed women who were furloughed were furloughed for longer than men.
The fact that companies stopped reporting on gender pay, when they were – temporarily – no longer required to, showed that legal measures can make a big difference to the transparency of companies. And transparency is a step on the road to equality.
Yet something else also affected corporate equality commitments in 2020. Global protests about racial justice, which followed the murder of George Floyd by a policeman in Minneapolis, put pressure on companies to address racial justice, social equality and diversity in their own structures.
In the last year of corporate sustainability reporting, which for most companies was 2020, nine new companies signed the Race At Worker Charter. They joined 29 others who had already “committed to improving equality of opportunity in the workplace”.
The Charter is voluntary, and not enforced by any sort of regulation, but it does call for businesses to begin capturing and publishing ethnicity data, as well as appointing an executive responsible for providing visible leadership on race and ethnicity.
In some ways, the FTSE 100 answered this call:
- Nearly half of the companies that have signed the Charter also publish some data on representation, whereas only a small percentage of non-signatories publish (7 of 62).
- 19 of 100 companies report on the proportion of their workforce who are BAME, which is only two more than in the last reporting year (17 of 100). Yet in contrast to this slight increase, reporting of the level of BAME representation amongst senior management in the FTSE 100 doubled, with 14 of 100 now telling the world how diverse – or not – their leadership teams are.
- Average BAME representation on FTSE 100 senior management teams did increase from 9 to 13 per cent with the addition of more reporting; Hikma Pharmaceuticals publicly shared their data for the first time, and have 60 per cent ethnicity representation amongst their senior management.
- 83 of 100 companies have also met the target requirements of the Parker Review, which requires companies to have some form of ethnic representation on their board. The BAME pay gap is much less discussed – and is reported by only 4 of 100 companies.
- Pearson, Whitbread, RELX, ABF, Halma, Ocado, Rentokil Initial and Sage Group all published ethnicity data of some kind for the first time in the most recently reported year.
Between 2019 and 2020, reporting on ethnic diversity by the FTSE 100 rose by nearly 45 per cent, as companies provided more data on representation and pay. But the level started low, and so remains low. In this sense, there is a stark difference between the transparency around ethnicity and that around gender.
As the slump in gender reporting in 2020 showed, when transparency is a “nice to have” rather than a “must-do”, too many companies choose to be opaque. But there are still no legal requirements for companies to report on either ethnic diversity or the diversity pay gap.
Other key findings in the latest update of the Index include:
- Overall, the FTSE 100’s carbon footprint in the most recently reported year was 355 million tonnes of CO2 – an amount that surpasses the annual CO2 generated by every household in the UK five times over.
- Scope 1 and 2 emissions, which are those directly made by companies or made through energy consumption across the FTSE 100 fell by 61.5 million tonnes of CO2e, representing an average drop of 14 per cent per company year-on-year.
- 14 companies increased their scope 1 and 2 emissions, often because they bought other companies. But mining company Evraz had the biggest absolute increase because of methane removed from its mines. Read more here.
- 64 of the UK’s 100 biggest listed companies currently have targets to reach net zero emissions between now and 2060. Twenty-nine have set out targets to specifically reduce their scope 1 and 2 emissions. Read more here.
- Land Securities, the largest commercial property development and investment company in the UK, rose to the top of the Index from sixth place. It increased the level of representation of women and ethnic minorities in the business while reducing the gender pay gap by 2.8 per cent. The company is now a Prompt Payment Code listed organisation, meaning it has made a verified commitment to pay all invoices to suppliers in a timely manner. The emissions intensity of its operations fell by 12 per cent, as did their overall emissions.
- British Land, another property development and investment company, rose 16 places to second in the Index. It was one of the companies which met the Parker Review target and it also improved recycling performance, lowered emissions and increased spending on research and development.
- Relx, a multinational analytics company, rose one place to third position. It also met the Parker Review target, recycled much of its waste, paid more tax and increased BAME representation.
- Lloyds Banking rose 15 spots to fourth place. It met the Parker Review target and notably began reporting on its waste, recycling, and use of renewable energy.
- Burberry, the clothing retailer, stayed steady in fifth position. It met the Parker Review target and has committed to organisations like the We Mean Business Coalition.
- Severn Trent is in sixth place, down three from the last update. It lost points in the Index for environmental fines.
- BT Group, the telecommunications company, dropped five spots to seventh place. It lost most points for its relatively poor response rate to human rights accusations and its response to the Modern Slavery Act 2015.
- Unilever has been at the top of the Index in every past update, but this time it fell seven spots. It mainly lost points in our Index for increasing energy use, its gender bonus pay gap, gender pay gap, and its Modern Slavery Report ranking by the Business & Human Rights Resource Centre.
- Barclays, the bank, stayed stable in ninth position. It scored well in our Index on its reduction in energy use and proportion of waste which was recycled or re-used, rather than being sent to landfill.
- RSA Insurance Group is in tenth place, up 28 on the last Index ranking. The insurance company scored points for transparency thanks to its newly reported figures on waste sent to landfill, waste recycled or reused, and total electricity usage from renewable sources.
Additional research by Kim Darrah, Serdar Korur and Charlotte Soin.