As organisations look to accelerate progress on corporate diversity & inclusion (D&I), a lack of collaboration, uniformity and action across organisations, combined with fledgling policies, leave D&I strategies falling short of intended goals.
Howlett Brown partnered with Baker McKenzie to produce a new report which looks at the connection between diversity, inclusion and compliance and is based on key findings and insights from a survey of more than 600 compliance leaders.
The report examines the attitudes of compliance leaders in global organisations, and identifies four compliance-critical gaps hindering corporate D&I ambitions.
1. Maturity Gap: Many organisational strategies designed to promote D&I are perceived by compliance leaders to be in their infancy, and as a result, lack the sophistication and flexibility to manage increasingly complex needs, with 71% of current D&I strategies having been in place for fewer than three years. Of this number, 23% have been operational for less than one year.
2. Action Gap: Organisations often lack adequate practices and training to effect change, with 66% of respondents reporting their perception that companies often pay lip service to D&I without taking meaningful action. Furthermore, only 61% say corporate leadership of their organisation is doing enough to address the growing importance of D&I.
3. Consistency Gap: Organisations struggle to ensure consistent application of D&I practices among employees, subsidiaries and partners and face inconsistencies between public promises and actual results: 67% sharing concern that these groups are not always compliant with corporate D&I policies.
4. Integration Gap: Compliance is part of an organisational ecosystem that manages and influences diversity and inclusion, but collaboration on D&I is rare, and policies are often disconnected. In fact, only 31% of compliance leaders report collaborating frequently with their counterparts in other departments to advance D&I.
These gaps exist despite increased pressure from stakeholders to accelerate existing progress on D&I: 77% of compliance and ethics leaders surveyed say that investors and shareholders have focused more attention on D&I in the past year and 70% say that customers and clients are asking more about these policies.
Moreover, these gaps are exposing organisations to corporate risk: 28% of compliance leaders state that their organisations are vulnerable to litigation as a result of public promises on D&I that cannot be measured or met and 68% say that a lack of diversity in the compliance team undermines their ability to conduct fair and effective investigations.
Yindi Gesinde, Partner, Compliance & Investigations, Baker McKenzie, emphasised the compliance function’s role in helping organisations to address these gaps, and in turn, better manage compliance and litigation risk: “Organisations that assemble diverse teams and create inclusive cultures reap the benefits in business performance. I believe that includes better management of possible compliance and litigation risk. As this connection becomes better understood, leaders recognise the need to be more organised and targeted in their efforts to accelerate progress, including by improving collaboration between functions.”
As organisations recognise compliance as a key enabler of change, Charlene Brown, Co-Founder and Managing Director, Howlett Brown, shared how the function can support D&I strategies in action:“The [compliance] function is well placed to support organisations and aid in mitigating D&I related risks such as managing mandatory and voluntary disclosures, setting and implementing culturally appropriate policies and expectations and providing training. Compliance can also build a feedback loop following investigations, breaches and whistleblowing to stakeholder teams such as HR, Comms and Legal, not only managing these downstream issues but integrating learnings back into policies, procedures and practice. This ability to create confidence and consistency at all levels of the organisation cannot be underestimated.”