Exploring Equality, Diversity & Inclusion in the retail, hospitality & leisure sub-sectors of the FTSE 350
Equality, Diversity & Inclusion (ED&I) is of paramount importance to ESG as it represents the social pillar of sustainable business practices.
By fostering ED&I within organisations, ESG initiatives can promote equal opportunities, enhance employee engagement and productivity, and drive innovation. Embracing ED&I not only aligns with ethical principles but also contributes to social impact, attracting investors who recognise the value of diverse perspectives and inclusive cultures in navigating challenges and achieving long-term sustainability goals.
When we examine this area within the consumer FTSE 350, there appear to be notable differences and trends between the FTSE 250 and the FTSE 100.
Across the FTSE 250 businesses in the consumer sector, there is a 12% increase in mentions of DE&I in the most recent reports. The average number of times that ED&I was referenced rose to 53.2 from 47.6. In contrast, the FTSE 100 experienced a decrease of 8% in ED&I mentions.
12%
Consumer businesses in the FTSE 250 recorded a 12% uplift in ED&I mentions in their annual reports
There appear to be notable differences and trends between the FTSE 250 and the FTSE 100.
Figure 3 - Average number of ‘ED&I’ related mentions by sub-sector in FTSE 350 Annual Reports (Source: Irwin Mitchell)
Within the sub-sectors of the consumer sector, there are variations in the mentions of ED&I in their reports. The leisure and hospitality sector witnessed a smaller rise of 3.1%, with mentions increasing from 63 to 65. In contrast, the retail sector demonstrated a significant decrease of almost 7% in ED&I mentions.
Expert comment
“Our research suggests that ED&I is moving up the agenda with some businesses within the sector.
“In-depth research and analysis conducted by BRC, The MBS Group, and PwC in 2021, reported a mixed picture. They reported that in terms of gender diversity, retail was on the cusp of achieving the target of 33% women on Boards. At the same time, however, it was disheartening that one in five retailers still had all-male Boards, and 15% lacked women on their executive committees.
“The numbers painted a similar picture when analysing ethnic diversity. In 2021 an astonishing 81% of retailers lacked Non-Executive Directors from ethnic minority backgrounds, and 68% had executive committees composed entirely of individuals from a white ethnic background.
“When it came to the scope of diversity and inclusion strategies, the report said the focus was varied. While 100% of strategies encompassed gender considerations, only 90% addressed race and ethnicity, and 68% touched upon LGBTQ+ inclusion. It was revealed that disability is a focus in only half of these strategies, and social mobility and age received attention in less than a quarter of them.
“Diversity in Retail, which recently welcomed Tesco as a member, joining the ranks of other inclusive-minded retailers such as Sainsbury's, Asda, and the John Lewis Partnership, published its annual report last November.
“Here it looked at the state of ED&I, not just in retail but across the hospitality, travel, leisure (HTL), sector too.
“This report highlights several key findings. It says that although multi-site businesses in the retail sector (93%) and HTL industry (90%) demonstrate robust and coordinated EDI strategies, the pace of change in achieving gender parity remains slow. Emphasising the need for accelerated progress towards achieving a more balanced gender split, it found that the FTSE benchmark of 40% women on boards still eludes both industries.
“On a positive note, leadership teams in these industries have become more ethnically diverse over time. However, it said that the rate of change has slowed, and certain sub-sectors, such as pubs, caravan parks, and late-night venues, still lack ethnic diversity.
“Most companies have made positive steps in LGBTQ+ inclusion, with the identification of senior LGBTQ+ role models within their organisations and the establishment of active LGBTQ+-focused Employee Resource Groups. However, it is essential to create an environment where all employees feel comfortable disclosing their sexual orientation, fostering a culture of openness and acceptance.
“Unfortunately, the sectors also continue to lack senior leaders who openly identify as disabled, and disability inclusion initiatives are in their early stages. While some companies prioritise neurodiversity, the organisation says there needs to be a focus on physical disabilities as well, ensuring that individuals with disabilities are represented and empowered at all levels of the industry.
“It was also found that age inclusion is not consistently emphasised in D&I strategies, with only around 46% of HTL companies and 35% of retailers including age in their strategies.
“While there are signs of progress in ED&I, there is still much work to be done. The data from our own research into the annual reports overall suggest that the issues are being taken more seriously, but there isn’t yet a clear and consistent picture. There also appears to be different levels of understanding of diversity inclusion which points to a requirement for organisations to invest in appropriate training.”
On a positive note, leadership teams in these industries have become more ethnically diverse over time. However, the report said that the rate of change has slowed and certain sub-sectors still lack ethnic diversity.
Charlotte Rees-John
Employment partner and Head of Irwin Mitchell’s Retail, Hospitality & Leisure sector