Diversity and inclusion "The number 1 boardroom challenge

?There is still more to be done?, is a phrase many senior executives repeat during their careers as they strive to improve diversity and inclusion within their organisations and set and meet stretch targets. This was echoed by the regulators in the recent publication of their diversity and inclusion plan. The message is clear. Businesses have come a long way in the last decade to try to address this complex leadership issue. But more action is needed.

There is no doubt that great strides have been made across financial services in recent years to ensure greater diversity, inclusion, and equality - both within firms and through government and industry initiatives. These include the Women in Finance Charter, which recently reported on its fourth annual review showing that more than 70 per cent of signatories met or are on track to meet their targets for female representation in senior management. Also, as of January, there are no longer any all-male boards in the FTSE 350. This is great progress but this challenge is not just about gender. There must be greater representation and diversity of all characteristics, not one characteristic over another. This includes gender, ethnicity, age, disability, sexual orientation, and gender reassignment in the pursuit of a more diverse and inclusive workforce.

It was therefore encouraging that industry regulators documented the correlation of diversity and inclusion and the positive impact this has on the stability, fairness and effectiveness of firms in their recent discussion paper. Nikhil Rathi, the FCA's chief executive, has publicly suggested a sixth conduct question as part of the regulator's work on wholesale banks, specifically targeting organisational purpose and culture. Mr Rathi wants firms to continuously ask if their own management teams are diverse and inclusive enough to challenge the state of play and if working environments are suitable for everyone to speak up.

It is exactly this regular dialogue among senior leaders that will drive deeper change. Regulators agree with us and have acknowledged the importance of the Commission's work in developing an industry ?inclusion measurement guide? launched last month. The Guide focuses on three priority areas to help firms build more inclusive cultures: leadership, safe and speak up culture, and inclusive systems and processes. It proposes that these can be measured through assessment of employee perceptions, actions, and company structures. We believe this will help organisations become more diverse and inclusive by enabling them to assess their culture and see where change is needed.  

Firms, industry bodies and government need to continuously challenge the status quo. We know how important the pipeline of talent is in generating greater diversity at the top levels of industry. The FSSC believes that the best way to do this is through collaboration - sharing challenges and best practice. People are ultimately at the heart of the sector's success and provide its competitive advantage. A more diverse workforce and more inclusive firms and behaviours will increase and broaden the supply of skills and maintain our position as a global leader.

The FSSC is working closely with its members to provide practical tools to enable firms to accelerate reskilling, widen talent pools and increase opportunities for digitisation - the need for which has  been exacerbated by the pandemic. As I noted at the beginning, there is more to be done on diversity and inclusion and while good progress has been made, the sector needs to go further and faster. Failure to act now will jeopardise the sector's future