Diversity, inclusion, climate change and other purpose-led actions are becoming increasingly prominent in UK boardrooms, according to a new report from Aon.
The research amongst employers found 46 per cent see an increased emphasis on diversity and inclusion, and shows an 11 percentage point increase in employers adopting Environmental, Social, Governance (ESG) strategies in pension scheme default investment funds or alternative fund options.
In terms of diversity, equity and inclusion (DEI) and benefits strategy, the survey asked employers to rank objectives important to their organisation, rating from most to least important. In last year’s survey, no employer stated that a Diversity/Multigenerational approach was their most important priority and just 2 per cent ranked it as their second priority. This year, 14 per cent said it’s the most important priority for their organisation, and a further 35 per cent said it was the second-most important priority, showing its increasing importance to employers and their employees.
The research finds that employers believe environmental and sustainability policies plus diversity, equity and inclusion issues are in the top four employee expectations
Of the 91 per cent of respondents who believed employees’ expectations of the workplace are changing, the top four expectations were shown as agile and home working, key for 95 per cent, more flexible working hours, a factor for 93 per cent, a better approach to diversity and inclusion, expected by 70 per cent and environmental and sustainability policies, a factor for 51 per cent.
Other areas where employers believed employees expected change included improved parental policies, access to financial education, volunteering opportunities and better awareness and handling of mental health issues.
Additionally, environmental concerns have impacted organisational actions on pension strategies. There has been an increase in employers adopting ESG in the design of pension scheme default investment funds or alternative fund options, from 8 per cent in 2020 to 19 per cent in 2021. There has also been a 7 per cent drop in those stating this is “not being considered”.
This pension funding insight supports the trend Aon is experiencing in the workplace pension market where employers want and need to address ESG within pension scheme strategies. This aims to meet internal policy and employee demand as well as a potential link to wider Corporate Social Responsibility (CSR) policies. The research found 75 per cent of respondents said it’s important to align their pension default fund ESG strategy with their wider CSR agenda.
Colin Barnes, director, proposition and development, Aon, UK Health Solutions says: “Before the pandemic, we were seeing the rise of the purpose-led organisation, which established clear objectives around the environment, sustainability and communities as well as Diversity, Equity and Inclusion. In 2020, as the world responded to Covid-19 as well as the rise of social justice issues, we collectively seemed to become even more aware of global issues, in the communities we live, work and do business.”
“This year’s survey shows that many organisations are responding to the issues we’re experiencing globally, and not only because of essential reactions to the pandemic. The long-tail risk of climate change and a dramatic change in attitude to cultural inequalities have seen organisations reacting to employees’ growing knowledge and demand for ethical services and solutions. ESG and DEI are becoming embedded in employer decision-making.”