Ethnicity Pay Gap Reporting

Lord Bilimoria Excerpts

Monday 25th October 2021 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, I am the first ethnic minority president of the Confederation of British Industry. From the outset, I wanted to find a way to champion ethnic minority participation across all businesses. I congratulate the noble Lord, Lord Boateng, on initiating this debate at this crucial time.

I am proud to say that, in the midst of the pandemic, the CBI launched the Change the Race Ratio campaign in October 2020. This aims to accelerate racial and ethnic diversity in business across the board. Our founding partners included Aviva, Brunswick, Deloitte, EY, Linklaters, Microsoft, Russell Reynolds, Schroders, the Investment Association, Unilever, Business in the Community, 30% Club, City Mental Health Alliance and Cranfield Business School. It is open to all businesses and institutions, large and small, and aims to create change in the business community. I am proud to say that, a year later, we have 100 leading organisations as signatories, from BP to Diageo to Odgers Berndtson to Glasgow University.

Organisations sign up to four things. The first is to champion the Parker review, launched in 2017, which recommended that there should be one ethnic minority director on every FTSE 100 board by the end of 2021 and one on every FTSE 250 board by the end of 2024. Sadly, today 20 FTSE 100 companies do not have a single ethnic minority director and only 54 FTSE 250 companies have one ethnic minority director. We have a long way to go. Research undertaken by campaign signatory Green Park, chaired by Trevor Phillips, revealed that there are no black chairs, CEOs or CFOs in the FTSE 100. We need to make a step change.

Secondly, organisations sign up to increase racial and ethnic diversity in senior leadership. Thirdly, they sign up to be transparent on targets and actions and specifically to disclose ethnicity pay gaps by 2022 at the latest. Fourthly, they sign up to create an inclusive culture in which talent from all diversities can thrive. I remember a Harvard Business Review article entitled “Diversity Without Inclusion Is Useless”. I have seen this first-hand from my own business, Cobra Beer, which started with just two of us. We built a mini United Nations, employing people from all over the world, from different backgrounds and cultures, and with different mindsets. That combination created a buzz, which created innovation, which created growth. I am so proud of it.

The CBI has just launched its economic vision for the UK for the next decade, called Seize the Moment. This includes creating an inclusive economy. The noble Lord, Lord Boateng, quoted the review of the noble Baroness, Lady McGregor-Smith, which said that improving participation would add an extra £24 billion to the economy. That is a huge underestimate; the figure would be far greater.

Many companies are leading the way. Eversheds, for example, set a public target to reach 10% ethnic minority UK partners by 2025. Google has set a target to support black executives and achieve at least 30% minority representation on its executive team by 2025.

We have learned from the experience with gender—specifically the Hampton-Alexander review—and gender pay gap reporting that change does not happen overnight. Gender pay gap reporting is now mandatory and what gets measured gets done.

McKinsey data from 2019 shows very clearly that the top quartile of companies that embrace diversity and inclusion are 36% more profitable than the bottom quartile. Deloitte has conducted surveys that show that companies that embrace diversity and inclusion are more innovative.

The ethnicity pay gap is over 25% in many companies. This gap should not exist. It is unacceptable. At the CBI, we report our ethnicity pay gap. Our director-general, Tony Danker, said in this year’s report:

“We still have a long way to go to eliminate institutional and systemic barriers in our workplace. It is in this spirit that we are committed to reporting on our ethnicity pay on a voluntary basis. Like our members, we want to do all we can to create a fair and inclusive workplace where everyone can thrive.”


To conclude, building diverse and inclusive workplaces is not only the right thing to do but has a strong business case behind it. Diversity increases employee satisfaction, helps to retain existing staff, attracts new staff, reduces recruitment costs, increases productivity and helps companies to better represent the communities they serve. Will the Government agree that we should make ethnicity pay gap reporting mandatory? What gets measured gets done.