Diversity Europe

Barriers EU Companies Face In Reporting Diversity and Inclusivity

Diversity and Inclusivity is one of the main features of corporate sustainability reporting. However, European Union companies currently have room to improve in both D&I initiatives and subsequent steps to remedy the large problems in the movements toward corporate equality.
By Jill Motley

Publishing and reporting diversity and inclusion metrics (such as age or gender) is an established feature of corporate sustainability reporting around the world, but some regions are doing better than others when it comes to consistent disclosure and follow up. External reports show that the current level of diversity and inclusion (D&I) disclosure lacks sufficient breadth and depth to satisfy the diverse needs of external stakeholders in the business world, and to address societal concerns about equality, equity, and social inclusion. It is likely that stakeholders' (e.g., investors and national governments) interest in D&I reporting will continue to increase, and it will be an increasingly important responsibility for D&I executives to manage both the risks and opportunities this brings.

A recent Atomico report indicates that European diversity and inclusion efforts still are not enough. In fact, according to Atomico, a shocking 92 percent of funding went to all-male teams and funding for all-female teams dropped in 2019. The same report showed that almost half of Black/African/Caribbean EU startup founders have experienced discrimination, of which 80 percent is linked to their ethnicity. Unsurprisingly, Black founders made up less than 1 percent of the founder respondents in the European Union. So what can be done?

Current Reporting Practices and Limitations
The topic of ethnicity, diversity and inclusion still has a long way to go in the European Union. One of the main challenges to accurate reporting – vital for establishing a baseline to build on – is linked to the complexity of reporting policies across Europe. For example, a report from the Diversity and Best Practices conference showed that the word “race” is not a commonly used word in Europe, causing tension in spaces where teams attempt to address issues surrounding the topic.

Additionally, laws that prevent companies from collecting personal data on identifications pertaining to sexual orientation, race and ethnicity, and ability/disability impede getting accurate data for diversity initiatives. These laws have a history rooted in the legacy of World War II and the Nazi’s use of stars, colors, and other markers to identify and persecute people based on their heritage and ethnicity.

Yet with limitations on collecting ethnicity and heritage data, many are concerned that some companies may use the lack of data as an excuse for the lack of progress. Others have brought up privacy and legislation perspectives, questioning who these metrics are measuring and for whom. To address these concerns, companies should host open conversations and strive to build context for data collection into the organization’s culture so inclusion can begin taking place. Further, governments looking at new legislation for human rights must strive to honor current laws on the books but also find a way to make reporting accurate, accessible, and inclusive.

A Long Way to Go
Statistics show that companies in the European Union have a long way to go in diversity and inclusivity. The European Union is still not a place where anyone from any background can succeed or thrive in the technology industry. Individuals with the most opportunity to leave and start technology companies in Europe are predominantly male, Caucasian, and educated at elite schools/ institutions, according to a recent report from Diversity UK.

Founders of color and of other diverse backgrounds often find themselves facing biases and discrimination that hinder both social and professional progress. Men make up 87 percent of venture capitalists and 83 percent of investment committees consist of only men. Conscious and unconscious biases are clearly shown in the lack of diversity in both venture capital and technology, in an industry dominated by privately educated white men. These biases are better reflected in the companies that are funded.

Statistics show that companies in the European Union have a long way to go in diversity and inclusivity.
However, less than half of venture capitalists from this Diversity UK report indicated that they were taking steps to improve their diversity and inclusivity. Basic measures, such as hiring a diversity and inclusion representative, have not been taken by most venture capital firms. The gaps in diversity and inclusion are made worse by the main group’s complacency: while male venture capitalists showed a lack in taking steps to increase diversity, its female venture capitalists were 63 percent more likely to take proactive steps towards D&I.

Team Roles in Diversity and Inclusion
Another metric to measure diversity and inclusion is taking a look at a team’s in-house legal figures. Interestingly, many employees affirm that their legal team has a large role in promoting D&I at their organizations. In a report by The Legal 500, more than 71 percent of surveyed employees felt that their company’s legal team has the power to take the lead on D&I measures. Surveyed participants go as far as to say that legal teams must serve as a role model for the rest of the organization.

While surveyed workers showed an amount of trust and respect for their legal teams, most of them (about 82 percent) reported a lack of initiative and implementation of unique measures in support of human rights. Findings even show that most employees on legal teams are reluctant to pioneer new ideas in diversity and inclusion. Although most in-house leaders show an interest in implementing policies that will increase their company’s diversity, it is this reluctance from their legal teams that often leads to a lack of action.

Whether it is challenges in gender equity or reporting a disability, companies in the European Union certainly have room to improve when it comes to advancing their diversity and inclusivity support. Companies willing to make the effort to navigate the complexities and open clear conversation channels have the potential to build on their influence and become pioneers for other organizations in Europe and beyond.