Ethical Performance
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top 100 could do much better on diversity

April 2000

The UK’s leading companies are still not putting enough effort into diversity policies, according to new research by the London-based corporate governance consultancy Pensions and Investment Research Consultants (PIRC).

In an analysis of company reports on the employment practices of FTSE 100 companies, PIRC found that while 84 of the 100 reported the existence of an equal opportunities policy, the ‘vast majority’ of those policies did not lay down any objectives on recruitment, training or promotion – nor did they have any provision for evaluation of their effectiveness.

PIRC says that only 14 of the FTSE 100 companies demonstrated their commitment to an ‘active diversity programme’ by allowing an independent third party to check the company’s code of practice was being followed.

Although some companies made use of external standards such as the Commission for Racial Equality’s Leadership Challenge (EP5, 1999, p9), most chose not to seek outside help.

In some areas PIRC found FTSE 100 companies were not even complying with the law. Five of the 100, for instance, did not report on employment and training policies for disabled people, despite a legal requirement to do so under the Companies Act.

However, there were some companies leading the way.

The study picks out British Airways for special praise for its equal opportunity policy and code of practice, which is underpinned by a steering group chaired by the director of human resources and staffed by senior line managers who ‘champion equal opportunity and diversity throughout the company’.

Shell is also praised for its ‘well developed diversity programme’ which is led by a core team of four managers in Shell International, 12 people in Shell Oil USA and a network of 30 ‘diversity focal points’ across the group.

Rio Tinto is commended for a new target to double the number of indigenous [Irianese] employees working as supervisors and managers at the Grasberg copper mine in Indonesia.

The survey also found that 12 companies – Abbey National, Bank of Scotland, Centrica, Compass, Diageo, GEC, Lloyds TSB, National Grid, Royal Bank of Scotland, Scottish Power, Securicor and Severn Trent – support wider anti-discrimination initiatives.

A total of 14 companies signed codes of practice produced by industry groups such as the Employers Forum on Disability.

PIRC says companies truly committed to diversity should have a widely publicised diversity policy that is ‘integrated into the company’s culture and business strategy’, is linked into firm policies on recruitment, employment and promotion, and is subject to an external audit.

They should also sign up to external codes of practice and be involved in attempts to promote equality in society as a whole.

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