Industry welcomes UK government’s move to mandate ethnicity and disability pay gap reporting
Investment professionals have welcomed plans from the UK government to mandate ethnicity pay gap reporting.
In an announcement today (25 March) following a consultation last year, it has been decided that large employers – with 250 or more employees – will need to report on pay gaps for ethnicity groups and those with disabilities.
It was agreed that, where possible, ethnicity and disability pay gap reporting should mirror the existing framework for mandatory gender pay gap reporting.
See also: bfinance: Just 4% of asset managers majority-owned by ethnic minorities
Seema Malhotra MP, minister for equalities and Sir Stephen Timms MP, minister for social security & disability, commented in a statement: “The driving mission of this government is to ensure that background is no barrier to success. Britain’s workplaces have made significant progress towards fairness and equality for ethnic minority and disabled people.
“But challenges persist, particularly when it comes to pay and progression. Too many ethnic minority and disabled people face barriers and negative attitudes at work, which can impact their pay.
“We cannot root out this problem until we can fully understand it. Greater transparency will provide employers with valuable insights into their own workforces and foster improved workplace cultures. Through the course of our stakeholder engagement, many of the employers who are already reporting their ethnicity and disability pay gap data on a voluntary basis highlighted the benefits and positive impact reporting has had in their organisation.
“Everyone deserves to go to work and achieve their full potential, regardless of their ethnicity or disability. By introducing ethnicity and disability pay gap reporting, this government is supporting employers to create more inclusive workplaces, so that regardless of background everyone can thrive.”
Reboot, the independent initiative and long-standing member of the government’s Ethnicity Pay Gap Steering Committee has called the move a “milestone” moment, as it has been something Reboot has campaigned for for over five years.
Noreen Biddle Shah (pictured), founder of Reboot, welcomed the government’s commitment: “Mandatory ethnicity pay gap reporting is an important milestone for the UK and a significant boost for national competitiveness. It gives employers, policymakers and the wider market the evidence required to improve workforce utilisation, support progression and strengthen long‑term economic resilience.
“We thank the government for its commitment to reaching this point. But while this is an important step forward, it is only the start — and the value of this reform will depend entirely on how thoughtfully it is implemented, rather than it becoming a tick‑box exercise.”
Biddle Shah highlighted mandatory ethnicity pay gap reporting will provide essential workforce transparency, and enables employers, regulators and investors to identify where talent may be under-utilised. The reports can also strengthen governance and support better long-term decision making. It has been estimated the UK’s ethnic workforce could add £36bn to the UK economy by 2051, according to research from Business in the Community (BITC).
See also: Reboot: Lack of ethnic diversity red flag for 40% of institutional investors
Justin Onuekwusi, CIO at St James’s Place and Reboot ambassador, also welcomed the news and highlighted that financial services should be pioneering the reporting. He said: “The financial services industry, given its central economic role, must lead by example and mirror the standards it expects of the wider corporate sector. This is a journey, and many firms are still at the early stages. This should not become an exercise in naming and shaming, but humbly recognising where progress is needed and committing to sustained, measurable improvement over time so that outcomes are meaningful and long‑lasting.”
Meanwhile, Bev Shah, co-CEO of City Hive and Reboot ambassador, commented that ethnicity pay gap reporting will provide much-needed clarity.
“Stewardship and regulatory clarity will be essential to ensuring the reporting regime is implemented consistently and rigorously,” she said. “Investors also have a critical stewardship responsibility. With consistent data, they will be better equipped to assess how companies are managing workforce equity — increasingly recognised as a factor influencing decision quality, long‑term resilience and governance strength.”
Reboot said it will continue to work with the UK government on clear action plans to ensure consistent reporting across all 18 ONS ethnicity categories, and emphasised the need for strong accountability mechanisms.
Biddle Shah said: “We look forward to continuing our dialogue with the government, industry leaders, regulators and investors – ensuring this framework is delivered thoughtfully and fulfils its potential to support better governance, higher productivity and a more resilient UK economy.”
See also: Industry diversity shows little improvements but firms step up on data collection
Mary O’Connor, chair at Axa XL UK, Hargreaves Landsdown UK, and TC Group, and Reboot ambassador, also commented on the news: “The financial services sector, as a major employer and a cornerstone of the national economy, has a particular role to play. Firms should now begin preparing by improving ethnicity disclosure rates, reviewing career progression and reward systems, and integrating ethnicity data into board‑level governance and risk management processes.”
While, Dimple Mistry senior HR professional and Reboot ambassador, added: “You cannot manage what you do not measure. In an industry built on data-driven decisions, mandatory ethnicity reporting is an important data point for HR to be able to identify structural barriers to progression. It’s not just about the moral argument of fairness and equity, it’s also about ensuring the UK remains a competitive, innovative, and transparent for the next generation of talent.”
This story was written by our sister-title Portfolio Adviser