Oct 18, 2024 Story by: Editor
Bloomberg — Black professionals in London’s financial district, known as the City, are observing a gradual shift. At first, the changes were subtle: fewer Black History Month events and a decrease in external speakers. Soon, however, the shift became more pronounced. Initiatives to recruit from underrepresented groups began to fade, and many diversity, equity, and inclusion (DEI) roles within companies disappeared. Despite the discussions around equity, the pay gap for Black workers has also remained largely unchanged.
Following George Floyd’s murder in the U.S. over four years ago, a wave of calls for transformation echoed across London’s City, sparking promises of reform. Yet, research now shows that genuine progress has slowed, with projections indicating it could take 50 years for Black representation in the UK’s financial services to reach 4.4%, mirroring the percentage of Black employees in the UK’s workforce. In London, where Black residents make up 13.5% of the population, this disparity is even more stark.
Bloomberg interviewed 20 Black professionals currently or formerly employed in roles ranging from banking analysts to a global DEI head in London’s financial sector. Many of those interviewed preferred to remain anonymous to avoid repercussions from their employers. While some remain hopeful about their career paths in finance, others have opted to exit the sector. A common thread among them was the perception that the City’s commitment to racial equality has waned.
“It almost seems like it was just trending for a moment, but now that trend is moving,” said Junior Garba, CEO and Co-Founder of Equity City, an organization that partners with financial and professional service firms to recruit diverse talent.
After the Black Lives Matter movement, many UK companies committed to addressing racial disparities. Some pledged to boost Black recruitment and reduce high turnover rates, while others, like Lloyd’s of London, publicly apologized for their historic ties to the transatlantic slave trade.
However, employees now feel that DEI efforts in the financial industry are being sidelined. Some expected this, especially after conservative backlash led U.S. companies to scale back DEI initiatives. Although City firms haven’t faced similar external pressures, experts attribute the setback to ineffective processes, economic challenges, and shifting priorities.
Pauline Miller, who spent 20 years in finance, including managing DEI initiatives at State Street and Barclays Plc., noted that companies are reassessing progress and saying, “we’re not seeing enough progress; we haven’t fixed the issue in two years.” Miller attributes this to DEI efforts in 2020 that were rolled out rapidly but lacked robust strategies and sustained financial support.
Miller also highlighted that many DEI hires lacked the experience needed to initiate cultural changes, which led to frustration and ultimately, a quick rollback of programs.
Natasha Ferguson, COO of the Taylor Bennett Foundation, an organization that connects diverse candidates with employers including Banco Santander SA, mentioned that interest from financial institutions in its programs, like paid internships and mentoring, has decreased by 25% since 2022. Many of the foundation’s clients are also reducing recruitment cohorts for Black Heritage schemes, which aim to integrate Black talent into professional fields. HR professionals have admitted they were unprepared to support the influx of previous hires.
A representative for Santander confirmed that the bank’s DEI spending and staffing levels have remained consistent. “The Bank is committed to being a truly inclusive organization reflecting the customers and communities we serve – our DEI strategy is designed to deliver this,” they said.
A former employee who joined a top financial PR firm after participating in a diversity program noted a sense of tokenism. “I felt that sense of tokenism that people always talk about,” they shared.
KPMG’s 2023 report underscores the lack of substantial progress in racial equality, showing that Black representation in financial services has not markedly improved since 2020, with some areas seeing declines.
Part of the problem lies in the lack of disaggregated data for ethnic minorities, particularly Black employees. Historically, UK companies grouped Black, Asian, and Minority Ethnic (BAME) employees, obscuring the unique experiences of each group.
The Financial Conduct Authority (FCA), the UK’s financial regulator, acknowledged that DEI is a regulatory matter and proposed requiring firms to publish DEI strategies. This plan was paused this year, however, after the House of Commons Treasury Committee warned it could lead to a costly “tick box” approach.
The Change the Race Ratio, an advocacy group with financial signatories like HSBC Global Asset Management, Lloyds Banking Group, and Schroders Plc., recommends that companies aiming to close representation gaps collect data on the representation, progression, and tenure of Black employees. However, the group itself only began tracking Black senior management representation and minority attrition rates this year.
Under UK regulations, employers can ask staff to disclose their background, including ethnicity and socioeconomic details, but few did so until the Black Lives Matter movement gained prominence. Some employees, however, have resisted or opted out of sharing this information.
A DEI director at a major asset management firm said that her efforts to gather data were hindered by a lack of board support, with only 65% of employees participating. “Without data to demonstrate progress, the former employee said their job was made virtually impossible.”
The slow movement on DEI efforts is apparent in daily experiences. Karen Muperere, a former private equity analyst, said that Black History Month events at her previous firm dwindled, and multiple DEI professionals left abruptly. “They were just gone,” she observed.
This softening of DEI efforts distinguishes the UK from the U.S. Wall Street firms are openly cutting DEI programs, while in London, firms continue to tout diversity efforts with little tangible support. DEI professionals were often asked to organize events without adequate budgets.
According to Garba of Equity City, firms that scale back on diversity risk missing out on top talent, with candidates asking pointed questions about companies’ ethnic pay gaps and Black-focused recruitment goals.
While ethnicity pay gap reporting isn’t yet mandatory, many finance companies have voluntarily released this data, showing that Black employees face the largest wage gap among ethnic minorities.
Some industry insiders remain hopeful. Mark Lomas, Lloyd’s of London’s head of culture, emphasized that creating enduring change is “not impossible” but requires “concerted concentrated effort.” Last year, Lloyd’s reported that one in three of its hires were from ethnic minority backgrounds, though it did not disclose the percentage of Black employees. Source: Financial Post
