Full transcript below
Thank you, Mary-Ann.
And welcome back to day two of the CBI’s 2020 diversity and inclusion conference.
Now, in my job, people often ask me whether the world of work has changed during my career. They want to know – has it improved? Is it harder to start a business today than in the past?
My answer is this: when I came here to study from India in the early 1980s, as a 19-year-old, my friends and family in India told me that if I decided to stay and work in Britain after my studies, I would never get to the top.
They said: as a foreigner, I wouldn’t be allowed to get to the top. And back then, I’m ashamed to say, they were absolutely right. At that time, in the 80s, when I came here there was – without a doubt – a glass ceiling. For so many immigrants, for ethnic minorities and for so many people like me.
That was over three decades ago. Over these decades, I have seen – in front of my eyes – that glass ceiling being well and truly shattered. Today I am the first ethnic minority President of the CBI. It took 60 years to get there. I’m also the first CBI President who is an entrepreneur, a Crossbench Peer, and a University Chancellor all at once. This is all thanks to the amazing opportunities I have been given here in the UK.
Above all, this country has given me the chance to build a business – Cobra Beer – from scratch. Which I’m proud to say is now a household name.
So, back in June, when I became CBI President, one of my first pledges – was to make certain that more talented people, particularly minorities, and all those underrepresented in business get that same chance, and can get to the top.
No matter their background, race, ethnicity, gender, disability, sexual orientation, religion, or any other characteristic. Because what we’ve seen over the past few decades in Britain is not only that inclusive workplaces are the right thing to do but that they are also the best thing to do for business.
We have made progress – but we still have a way to go. We are still only in the middle of our journey.
Take the world of politics. I remember when I was reading law at Cambridge University in 1987, we were celebrating as the first four ethnic minority members of Parliament were elected to the House of Commons since before the Second World War.
And there was one ethnic minority peer in the House of Lords, of Indian origin. Who, as it happens was a contemporary of my mother at the University of Birmingham in the 1950s. So a total of five ethnic minority parliamentarians in 1987.
Then, in 2012, to celebrate the 25th anniversary of these MPs being elected we had a photograph on the steps of Westminster Hall – a 900-year-old building in Parliament. There were 69 of us.
Fast forward, to the December 2019 election, and in January 2020, we had a photograph on those same steps – and there were over 100 of us. There are currently 115. Including the Chancellor, Rishi Sunak and the Business Secretary, Alok Sharma. Two fantastic ethnic-minority leaders, we work with regularly.
But even today, our Parliament still represents far less than the proportion of ethnic minorities in the country as a whole. Ethnic minorities make up 15% of the population of the United Kingdom. And if we were to have that same proportion of ethnic minorities in parliament – we would need to get over 200.
So we still have a way to go.
The same is true in business. As our new Director-General Tony Danker said yesterday, we’re on a journey. And there has been great progress.
On gender equality, for example. A decade ago, the government review into women on boards – led by my colleague in the House of Lords, Lord Davies set a target to increase female representation at the top of industry – to 25%.
Looking back, it perhaps seems a meagre target. But it took business action through the 30% club and the work of the CBI’s first female President, the amazing late Dame Helen Alexander to meet that. And then go further.
And look where we are today. Ten years later, there's only one FTSE 350 company that doesn't have a woman on their board.
In fact today, 33% of FTSE 100 and FTSE 250 board members are women. And we need to keep building on this momentum to make sure that – one day soon – boards are truly representative.
So we’re on a journey. We have made progress – businesses are ambitious. But there’s still a long way to go.
The business case
And there are real, tangible benefits to meeting these goals. A report in 2017, led by another colleague of mine in the House of Lords Baroness Ruby McGregor Smith – an incredibly successful businesswoman in her own right – found that the lack of ethnic diversity in business is costing the UK £24 billion a year in lost GDP.
Landmark research by McKinsey shows that firms with the lowest rates of both gender and ethnic diversity in their executive teams were 27% less likely to be profitable. 27% more chance of failure!
And evidence shows that more diverse organisations and boards make better business choices exhibit greater growth and innovation and carry lower risk.
In the case of ethnic and cultural diversity, we know top-quartile companies outperform those in the bottom quartile by 36% in profitability. No matter where you look – there’s so much hard, quantifiable evidence like this showing that diverse businesses are more profitable, more innovative, and more competitive.
Diversity works. And in a business environment so uncertain, so hard-hit by COVID, and facing the challenges of automation, global hegemonies, and a new trading relationship with the EU, no business can afford to miss out.
Recently I read an excellent article in the Harvard Business Review – by Christine Riordan called ‘diversity is useless without inclusion’. It's inclusion that makes diversity work.
It's about creating that environment, and that culture where everyone feels they can belong, and everyone feels they can reach their highest potential.
And a survey by Deloitte found that – when employees feel included in the workplace their ability to innovate increases by 83%.
In fact, I speak from my own experience. When we started Cobra beer, there were just two of us: my business partner and I. We were a microbusiness. And then we started building a team – and the team that we built over the years grew into what was like a mini-United Nations. We had people from all corners of the world. From Canada, the US, from different countries in Europe, from Africa, from the Middle East, from South Asia, South East Asia, Australia, and New Zealand.
People of different ethnic backgrounds, different religions. And this huge diversity brought in a diversity of mindset. A diversity of cultures. It created the most amazing buzz. And an environment that was truly innovative. So much so, we grew at a compound annual growth rate of 40% a year for the first 18 years of Cobra’s history. And there is no question that the amazing diversity of our team played a huge role in this.
The human cost
But, of course, this isn’t just about money, there’s a real human cost, and legacy of pain here when people are discriminated against, because of who they are, what they look like, or where they come from.
Generations of lives lost. Hopes shattered. Opportunities denied.
So when – eventually – the trials of this pandemic pass and they will let none of us forget its greatest lesson: that we are responsible for and beholden to, each other.
And, together, hold the power to challenge and change this world for the better.
Call to act
In saying that, I recognise – with so much to do, it can perhaps feel daunting. So today, I want to lighten the burden a little. And focus on just one issue. Something specific, something achievable, and something vitally important. And that’s increasing racial and ethnic diversity in boardrooms – we’re still so far behind.
The Parker Review, commissioned by the government in 2016 set a target for every FTSE 100 board to have at least one ethnic minority director by 2021. And every FTSE 250 board to have at least one ethnic minority director by 2024. Then an update to the Parker Review, conducted in February found that although progress had been made, it was far too slow. In fact, it found that 37% of FTSE 100 companies. And 69% of the FTSE 250 don’t even have a single ethnic minority director on their board.
So, even before I became CBI President in June, as Vice President, we started working on a new campaign called ‘Change the Race Ratio’. Led by the CBI, along with UK business leaders from:
- Business in the Community
- City Mental Health Alliance
- Cranfield Business School
- Russell Reynolds
- The 30% Club
- The Investment Association
- And Unilever.
With one, singular goal: To increase racial and ethnic participation in business. The campaign launched officially in October. Since then, we’ve had over 50 major employers sign up already. I’m incredibly proud, and humbled, by the huge momentum we’ve seen so far.
And when people sign up, we have four asks. Four things that I want you all – every person listening – to think about in your own companies.
First, at board level. We’re asking firms to set targets to have at least one racially and ethnically diverse board member in the FTSE 100 – by the end of next year. And in the FTSE 250 – by 2024.
Change the Race Ratio is going to champion the fulfilment of the Parker Review targets in the same way that the 30% club championed the targets for the Davies review for women on boards.
Second, is senior leadership. At the level of your Executive Committee and one level below that. To set clear, stretching targets for minority representation and – crucially – publish them with a separate, specific target for black participation at both levels.
Then, third is transparency. We’re challenging businesses to publish a clear action plan. Setting targets and sharing progress in your company’s Annual Report or on your website. Or both.
And a core part of this transparency is disclosing your ethnicity pay gap. It’s a key area of the campaign – asking firms to publish their data by 2022, at the latest. But it’s also something the CBI has long called for in the wider business community.
Not just in FTSE companies, but for all firms – above 250 employees – in the same way that gender pay gap reporting works. And which has helped to tackle pay disparities for many women. We can now do the same on race.
In fact, we’re also pushing for the government to back mandatory ethnicity pay gap reporting. Because we know what we can measure, we can change. And what’s measured, gets done. So that’s the third ask.
Then, fourth, and finally – is creating an inclusive workplace culture. One in which anyone talented can thrive.
We know that abstract word – ‘culture’ – can feel hard to change. But I promise you there are clear, tangible things every business dialling in today can do.
- Inclusive recruitment and development practices – to build a more diverse talent pipeline.
- Collecting the right data – to see where action is needed.
- Fostering open and transparent dialogue – spaces for conversations and ideas.
- Looking at the mentoring, support, and sponsorship you can provide – to create opportunities for growth.
- And – if you’re part of a supply chain – challenge conventional thinking, to look at how you could work with a more diverse set of suppliers and partners, including minority-owned businesses.
So those are the four commitments:
They are practical, achievable. They could make your business more innovative, more profitable, more attractive to talent. And they could help make society fairer for everyone.
To reiterate – the objective is to champion ethnic minority participation across all business.
So, if there is one thing – one action that I challenge every business listening today to do it is this. Sign up to our campaign.
If you’re an HR expert, lobby your CEO. If you’re a CEO, lobby your board. If you’re a board member – make it happen.
55 major employers are already signed up. In every sector – from industry giants like Diageo to companies employing hundreds of thousands of people, like Sainsbury’s, to the savvy money-makers at HSBC Global Asset Management and the creative geniuses at ITV. If these companies can do it, yours can too.
And if there’s one thing I know for sure, from my own experience in industry, and in life, it’s this: diversity works. Inclusion works.
So, by stepping up – showing that businesses can lead, and make a difference, we can be a beacon of light in society. A real example to others. And a driver of national ambition and progress.