First published by The Ferret on 7 August 2020
Not one of Scotland’s 48 listed companies features a Black executive on its senior management team while just six employ executives from an Asian background, The Ferret can reveal.
Our research also found only five firms have any ethnic minority representation on their non-executive boards. This prompted the Equality and Human Rights Commission to say it was in “any organisation’s best interest” to diversify its senior executives, while the Coalition for Racial Equality and Rights urged firms to collect more data on the issue.
There is just one partner who is not white working in a Big Four accountancy practice in Scotland while between the country’s five largest law firms – Brodies, Burness Paull, Harper Macleod, Shepherd and Wedderburn and Thorntons – there are only five non-white partners, three of whom are at Harper Macleod.
Investment funds Alliance Trust, Baillie Gifford Japan and Ediston Property Investment Company are each co-run by a person of colour. But just three other listed Scottish companies have any ethnic minority representation on their management teams.
The largest is FTSE100 investment business Standard Life Aberdeen, where one member of the 12-strong leadership team – Rushad Abadan – comes from a non-white background.
Scotland’s smallest listed company, Quiz Clothing, is run by a team mostly of Asian heritage, with Glasgow-based founder and chief executive Tarak Ramzan joined by chief commercial officer Sheraz Ramzan and retail operations director Omar Aziz.
The commercial director of life sciences company Omega Diagnostics is of Asian heritage.
Diversity in boardrooms
In terms of boardroom representation, only FTSE 100 investment fund Scottish Mortgage, banking giant Natwest Group, Standard Life Aberdeen, banking group Virgin Money and oil services firm Plexus have any non-white non-execs, with each having appointed one person from an ethnic minority background to its board.
Standard Life Aberdeen – whose fund managers regularly hold portfolio companies to account on corporate social responsibility issues such as executive pay – has the most ethnic diversity at its senior end, with one non-white executive out of 12 and one non-executive from an ethnic minority out of eight.
A spokesman for Standard Life Aberdeen said the organisation recognises it needs to do more to ensure there are ethnically diverse staff at all levels of its business.
“Greater representation of diverse talent needs to happen at all levels, including at executive leadership level and on boards, as these groups are the visible representation of what a company stands for. Like many companies, we have made progress on gender balance and 45 per cent of our board positions and 36 per cent of leadership roles are now held by women,” he said.
“But we must do more, which is why improving minority ethnic representation and opening up routes for individuals from a variety of backgrounds to join our industry are our current priority areas of focus, alongside gender.”
Similarly, law firm Brodies, which has one non-white partner among 106, and Big Four accountancy firm EY, which in Scotland has no partners from an ethic minority background, said more needs to be done to ensure their businesses are reflective of the communities they serve.
“Businesses should reflect our societies,” a spokeswoman for Brodies said. “In the legal sector, we have a collective responsibility to achieve that, and there is more to do.
“The skills, experience and perspectives of a diverse workforce, at all levels and stages, can open up our way of thinking to new ideas and insights, and can form the basis for the solutions and advice our profession provides to its clients.”
Sue Dawe, head of financial services for Scotland at EY, added: “We know that progress on racial equality hasn’t been fast enough and that there is more we must do.
“Our leadership team in Scotland and the UK is committed to taking leaps rather than small steps on this agenda and will make the necessary adjustments if we don’t get this right at every stage.”
Transparency on diversity
Jatin Haria, executive director at the Coalition for Racial Equality and Rights, said that in order to achieve meaningful change businesses will have to start gathering data on the ethnicity of their workforces, something that has not been done in “any meaningful way” up until now.
“We have hardly any data about ethnicity and the private sector in Scotland and this needs to change – and change fast – because we will not get more BME [Black and minority ethnic] senior execs until we first get more BME middle managers. We can’t say what the picture is just now as we don’t have the data,” he said.
“We know that BME graduates don’t get the same opportunities to get into employment as their white counterparts so the discrimination starts from a very early stage – if you can’t get on the bottom rung of the ladder you’ll find it near impossible to climb up.”
FTSE 100 business Natwest Group (formerly RBS) stands alone among Scotland’s listed companies by having put in place ethnicity targets to ensure measured change can be achieved within a specific timeframe. As part of that it has pledged to “identify, develop and pull through at least 14 per cent non-white leaders by 2025”.
The Big Four accountants – Deloitte, EY, KPMG and PwC – have made similar pledges since the Black Lives Matter movement ramped up earlier this year, each promising to bring minority ethnic candidates into their partnership ranks between 2022 and 2025.
A spokesman for PwC said that using data to achieve its targets “is a key part of building a strategy and action plan on inclusion and diversity that drives change”. Dawe at EY said that putting in place measurable commitments is “an important starting point for us to achieve the cultural change we want to see”.
However, Usman Tariq – an advocate who founded the Scottish Ethnic Minority Lawyers’ Association with the specific aim of improving ethnic diversity in the legal profession – said that in the absence of economic incentives there is no external pressure being put on any business to ensure its internal targets are met.
“There’s the Intel Rule in the US,” he said. “[Technology company] Intel works with the legal profession and was keen to see diversity improve, but was frustrated by the progress – it said it would take 50 years to reach a balance if things continued at the same rate. The Intel Rule means it won’t retain or reuse any law firm in the US that is average or below average on diversity. [Businesses here] should be looking at that.”
Haria agreed, noting that the public sector could exert its influence over private businesses by making a demonstrable commitment to diversity a key factor in companies being able to bid for public contracts.
“Public procurement contracts might be an easier way to go first with this because public contracts with private businesses are worth a lot of money, but we really don’t see much by way of equality obligations in public procurement,” he said.
In response, the Scottish Government noted that its Race Equality Framework, which was launched in 2016 and runs until 2030, looks to address workplace inequalities by outlining how businesses could promote race equality and tackle racism.
Equalities minister Christina McKelvie MSP said: “We are committed to increasing employment rates for those disadvantaged in the labour market, including people from minority ethnic backgrounds and in 2016 set out a vision to not only move more minority ethnic people into employment, but ensure they are not held back from the jobs that matched their skills, qualifications and experience.
“Since then we have actively worked with key stakeholders to ensure that minority ethnic communities are involved in key government priorities, such as the expansion of early learning and childcare and the need to recruit more to the sector, to make our workplaces better reflect their communities.”
That framework has not been updated to reflect the momentum that has built around the Black Lives Matter movement, however, and the Government did not respond to questions about whether it would incorporate something similar to the Intel Rule into public procurement processes.
A spokeswoman for the Equality and Human Rights Commission, which itself has no Black commissioners, said it is in the interests of all organisations, to ensure their workforces are reflective of the wider population.
“Taking action to improve and expand the talent pool available to employers isn’t a nice-to-do, it is the right thing to do and is a sensible business decision,” she said.
“As the country faces economic uncertainty resulting from the global public health emergency, it is critical for businesses to recruit the best and brightest people into their workforce.
“Having a senior team which reflects the diversity of our society is in any organisation’s best interest. Greater diversity means a broader range of views and experiences can be shared and built upon, leading to better, more informed decision making.”