The House of Commons Treasury Committee’s Sexism in the City report found that sexism remains a widespread and significant problem and that barriers to women’s progress “remain stubbornly in place” in the City of London’s financial sector.

The report, published in March 2024, follows up on the findings of the previous Committee’s report into women’s underrepresentation (2018), concluding that little has changed over the last five years, with many firms continuing to regard diversity as a “tick box” exercise.

The report makes for chilling reading.

Very small improvements were found in representation of women in senior roles and a very slight reduction in the gender pay gap but as this is still the largest of any sector in the UK, there seems little comfort to be taken from such a minor improvement.

Sexism in the City points to firm’s culture as both the epicentre of the many issues identified as well as the key to solving them.

Other areas of concern highlighted by the report were the “shocking” extent of misogyny, bullying, and sexual harassment, including rape, and the “widespread misuse” of non-disclosure agreements (NDAs), which silence victims and protect perpetrators, “leaving them free to continue their careers and go on to abuse others”.

Sexism in the City exposes the problem of “impunity for perpetrators and culture”, in which firms tolerate and even cover up incidents of sexual harassment, siding with perpetrators and punishing victims. Evidence given to the Committee referred to a reduction in overt sexism and misogyny in office settings but a continuing prevalence of “misogynistic mindsets” linked to more “underhand and pernicious behaviours” towards women especially at conferences, events and on work trips.

The report also notes the continuation of “old boys club” attitudes which fuel bias against women and perpetuate barriers, including initiatives such as mentoring and training that seek to “change women” rather than tackle cultural issues within firms.

There has been a very slight reduction in the gender pay gap but as this is still the largest of any sector in the UK.

In tackling the issues highlighted, the report emphasises the primary responsibility of senior leaders in firms, noting their role in creating culture change and ensuring “robust processes” are in place to investigate allegations and create a “zero-tolerance culture” towards bullying and harassment.

Investors and the Government also have roles to play, as do individual men in calling out and reporting problematic behaviours of other men, the report notes.

While the issues raised cover the financial sector broadly, fund management was specifically noted for its poor representation of women. Baroness Helena Morrissey, Chair of the Diversity Project, told the Committee: “There are big pockets of no progress whatsoever. [ … ] Still only 12% of named fund managers – people running an account and having their name on it – are women today. That has hardly changed in the whole 36 years since I have been in the City”.

So what can be done?

Summing up the litany of persistent problems and lack of progress, Sexism in the City points to firms’ culture as both the epicentre of the many issues identified as well as the key to solving them. So what specific actions can firms take to improve the situation?

• Firm boards and senior leaders must take responsibility for tackling these challenges, giving equal weight to diversity as to other strategic priorities. Since the evidence is clear that more diverse firms perform better and have better retention rates, this should have an obvious incentive.
• Senior leaders can also take responsibility for ensuring policies on sexual harassment and bullying are strenuously enforced, NDAs are not misused, and perpetrators are not shielded or tolerated.
• Training on unconscious bias and being an active bystander may also help to shift mindsets and highlight the impacts of lower levels of bullying, abuse and microaggressions.
• Offering equalized maternity and paternity leave packages, and being clear in job adverts what is available in terms of parental leave, can help to overcome barriers for women returning to work after having children, and contribute to minimising the gender pay gap.
• Hybrid, flexible and remote working patterns have a proven positive impact on the retention of women, but firms must also be careful to provide equal opportunities and treatment to all staff regardless of the amount of time they spend in the office. Advertising flexible opportunities in job adverts may also help to attract a more diverse pool of candidates.
• Assessing and reporting gender pay gaps, even for smaller firms, is useful in highlighting the state of the problem, but firms should also set out how they plan to tackle the issue, for example by including salary band information in job adverts and avoiding asking for salary history information from job applicants.

Our experience working with clients seeking to tackle gender and broader DEI challenges highlights the difficulty in implementing meaningful initiatives especially in smaller firms. Clearly there are also wider societal issues that cannot be solved by individual firms and we believe a proportional approach should be adopted in the context of a firm’s size and stage.

However, alongside government, investors and individuals, firms do have the power to examine their culture and ensure they have initiatives in place to drive inclusivity. In so doing, not only do they gain a competitive advantage in the attraction and retention of talent, but they send a message to the wider industry and contribute to ending the widespread prevalence of sexism and misogyny that plagues it.

Harriet O’Brien is an experienced ESG consultant at Danesmead ESG. Danesmead ESG provides ESG services for investment managers, specialising in Private Equity and Hedge Funds.