Refinitiv wants more companies to disclose efforts to close the gender pay gap
To conincide with International Women’s Day, Definitive has released the findings of a new report titled, ‘The Gender Pay Gap and your Investment Strategies.’
The new report uses Refinitiv ESG data and several FTSE Russell indices as a basis to examine the current state of the gender pay gap and the corresponding financial performance of different investment portfolios.
According to the report, it is important for a company to address the gender pay gap for several reasons:
• In some jurisdictions, equal pay is the law.
• Lower pay for women affects pension contributions and financial stability for many families now and later in life.
• Professional performance and relationships may be negatively affected.
Employee churn rates may be higher.
David Craig, Group Head, Data & Analytics, CEO Refinitiv, LSEG, says: “Though we continue to see more companies disclosing gender pay gap data in 2020, both disclosure and performance have a long way to go before we see the gender pay gap vanishing. Our ESG data and research show that closing the gender pay gap is not idealistic, nor is it a nice to have, it is a business imperative for companies of all sizes and geographies.”
In addition to Refinitiv ESG database, the report sources several FTSE Russell indices as a basis for portfolio analytics, including FTSE All World, FTSE Asia Pacific, FTSE Europe, FTSE North America and FTSE Developed.
The report finds that the gender pay gap has been a persistent issue in the labour market over the decades. The good news is that more companies are reporting gender pay gaps, due to pressure from investors and customers, government regulation or efforts to improve their ESG performance and scores.
Refinitiv ESG data shows that company disclosure continues to rise, with 748 companies disclosing gender pay gaps in the 2020, a 10% increase from 678 firms the year before.
Using several FTSE Russell indices as a basis for our portfolio analytics, our report reveals that all ‘No gender pay gap’ portfolios outperform those with a gender pay gap.
Stand-out industry sectots in the company's ‘No gender pay gap’ portfolios are Technology Equipment and Software & IT services.
Examining countries in its ‘No gender pay gap’ FTSE Europe portfolio, Refinitiv found that Germany has the biggest presence in the portfolio (21.66 per cent), followed by Switzerland, Russia and the Netherlands.
The report also found that companies in the FTSE Asia Pacific Index with no gender pay gap to have cumulative returns that outperform by a spread of 55.10 per centwhen benchmarked against all companies with a negative pay gap for women in the same index.