By Diana El-Alam and Pablo Berrutti
Gender equality continues to be a key issue that companies are being called on to address with public attention focused on issues like the gender pay gap, harassment, and a lack of representation. Companies are responding to regulations like mandated gender pay gap reporting in the UK, consumer boycotts like Amazon following allegations of gender discrimination, controversies like Rio Tinto’s harassment review and the investor focus on board diversity through forums like the 30% Club. However, like other Environmental, Social and Governance (ESG) issues, some companies have been accused of overstating their progress or ‘gender washing’.
What is gender washing
Gender washing occurs when the claims that companies make towards supporting gender equality are unsubstantiated and/or exaggerated. Intense scrutiny is exposing many instances of gender washing, meaning companies must take tangible actions that demonstrate their support for women beyond superficial statements lest they suffer the growing direct and indirect consequences.
International Women’s Day in 2022 saw a Twitter account shine a spotlight on many companies who made statements supporting gender equality despite paying women less than men. The Twitter account, Gender Pay Gap Bot, responded to these statements with the company’s gender pay gap, which companies with over 250 employees are mandated to report in the UK. Ironically, this led to exposed companies deleting their initial tweet to minimise the controversy.
The pay gap continues to be large
The longstanding issue of gender bias and pay gaps continues to permeate the corporate world with many firms coming under fire in recent years. Among them is Goldman Sachs which has been embroiled in a 12-year class action that will go to trial in June 2023. In this case 2,300 women have accused Goldman Sachs of deliberately underpaying women and blocking their career progression.
The past decade has seen an increase in women taking employers to court. The long standing pay gap is a contributing factor, with women making approximately 80 cents for every dollar made by men. This contrast is even more pronounced when comparing white men with women of colour. Major companies that have and are currently being sued for paying women less than men and impeding their career progression include Disney, Nike, Microsoft, Twitter and Google.
Punished for complaining
Many women who are speaking up against gender discrimination are facing retaliation by their managers who threaten their career progression. In 2021, five women filed lawsuits against Amazon claiming that they faced retaliation from their managers when they raised complaints about gender, sexual harassment and discrimination. An engineer at Twitter revealed that she was placed on indefinite leave after she brought up the concern of gender bias within the firm in 2021. Furthermore, many of the women suing Microsoft, Nike, Goldman Sachs and Nike state that they faced retaliation for speaking up against gender bias. If firms are to commit to solving the issue of gender washing, they can no longer dismiss claims of gender discrimination and retaliation from managers. This theme of punishing women who raise allegations has been shown to be a systemic problem and must be addressed.
Despite this, there are many positive examples of companies remaining committed to gender equality
Takeda, a pharmaceuticals company, committed to gender diversity targets in 2015 with goals to increase female employees in managerial positions. By 2017 they had achieved their 30% target of new managers being females compared to 6.2% in 2015. Another example is seen through Reyjavik Energy which following a firm restructure, implemented a pay gap audit. This was implemented following the discovery of a large gender pay gap. In order to close this gap, real time data was analysed to decrease the gender pay gap and increase females within management. This audit has led to the wage gap of 8.4% in 2008 to decrease to 0.2% in 2018. Job satisfaction surveys have seen employees score higher than the benchmark satisfaction levels, demonstrating the positive impact these actions have had.
The benefits of gender diversity
A 2018 McKinsey Global Institute study on gender equality across certain countries has found a positive correlation between gender diversity and corporate performance. It was found that companies that are ranked highly for gender diversity within their executive teams have a 21% probability of achieving higher than average profitability. The Credit Suisse Research Institute found that management teams with strong female diversity see the firm reporting high cash flow returns, less debt and strong sales. McKinsey found that if gender participation was equal, this could lead to $28 trillion added to the global economy. This would mean a 26% increase to global GDP by 2025.
The bottom line
Despite the clear commercial benefits and the ethical imperative for ending discrimination and inequality, much remains to be done with the World Economic Forum finding that at current rates it will take 151 years to close the gender pay gap.
Corporate action is welcome and essential for change, however, companies must ensure they are walking the talk. Like other sustainability issues, it is far easier for companies to make broad supportive statements than undertaking the hard work needed to change the situation. The tolerance that employees, customers, investors and regulators have for companies that gender wash is low, the tools to expose it are improving and the consequences have never been higher.
However, improvements in transparency of data and regulations are key to preventing gender washing from becoming a pervasive issue. Australia can learn from countries like the UK that have already put in place laws requiring pay gap disclosures. Beyond accountability, broader research demonstrates the benefit of increased female representation and so more information can also act as incentive for firms to walk the talk on gender equality.
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