“Transparency is important so stakeholders know how a topic is managed. Transparency shows where you are today and where you are heading.” — Alyson Genovese, Vice President, Global Head of Corporate Sustainability at S&P Global.
Clearing the Path to Gender Equality with Transparency and Legislation
The third session of the 2024 WEPs deep-dive series introduced European Union (EU) legislation and reporting requirements related to gender equality, with invited speakers from the Policy Department for Citizens’ Rights and Constitutional Affairs: Elodie Carmona, Head of Unit, and Andreea Chifan, Parliamentary Research Administrator, who discussed the Corporate Sustainability Reporting Directive (CSRD) and the newly adopted Pay Transparency Directive. Alyson Genovese, Senior Director and Global Head of Corporate Sustainability at S&P Global, a WEPs signatory, was also invited to share insights into how a global company has responded to these regulations.
Transparency for sustainability
Transparency and accountability are essential for companies to track progress in any area, including the Environmental, Social and Governance (ESG) framework. Previously voluntary, collecting data and measuring ESG indicators have become a requirement for companies operating in the EU through, among others the CSRD. Gender equality is a fundamental to the ESG agenda as there are clear risks associated with gender inequalities and opportunities with progress on gender equality.
Effective since January 2023, the EU’s CSRD contains comprehensive reporting requirements on European business undertakings, spurred by previous policy developments such as the UN Sustainable Development Goals (SDGs). Approximately 50,000 companies[1] are expected to comply with CSRD, with applicability varying based on company size, and at the outset required for larger and listed companies. Notably, CSRD reporting includes gender perspectives, covering workforce diversity, equal treatment, and discrimination prevention, with specific requirements on disclosing gender composition in administrative bodies and promoting diversity in top management.
Aligned with the WEPs, the CSRD serves as a critical driver for transparency and accountability within the private sector, emphasizing the integration of gender perspectives and promotion of equal opportunities for all. Complying with the CSRD and incorporating gender perspectives into sustainability reporting enables companies to showcase their commitment to gender equality, thereby boosting their competitiveness and reputation in the market.
Equal pay for equal work
Equal pay for equal work stands as a fundamental principle within the EU, yet persistent gender pay gaps underscore the need for increased transparency. The Pay Transparency Directive, adopted in Spring 2023, aims to tackle this issue by enhancing access to information and avenues for justice for victims of pay discrimination. Member states are mandated to transpose the Directive into national law by June 2026, ensuring its applicability across the private and public sectors throughout the EU.
At its core, this Directive addresses WEP Principle 2: Treat all women and men at work fairly without discrimination, which encompasses equal pay remuneration and implementing gender-sensitive recruitment practices. By requiring employers to disclose pay information and ensure transparency in recruitment processes, the directive aims to dismantle gender-based pay disparities and promote equitable compensation practices. Moreover, fostering a culture of transparency and accountability within the workplace, in line with WEPs, is essential for promoting equal pay and combatting discrimination.
Under this Directive, employers are obligated to provide job seekers information on starting salaries (or pay range) of advertised positions prior to interviews, fostering transparency from the beginning. The workers have the right to ask their employers for information about average pay levels, broken down by sex (for categories of employees doing the same work/ work of equal value) and the criteria used to determine pay and career progression.
Importantly, the Directive includes provisions for individual compensation for victims of pay discrimination. Member states are empowered to impose effective penalties for non-compliance, which may include fines based on company turnover, reinforcing accountability measures.
The Directive also addresses intersectional discrimination, extending protections to workers with disabilities and mandating the use of gender-neutral language in vacancy notices and job titles. Reporting obligations stipulate that companies with over 250 employees must disclose pay information to relevant authorities annually as of 2027, with data on pay gaps and remedial measures to be publicly available. Joint pay assessments are conducted in cases where pay gaps exceed five per cent and cannot be justified, fostering collaboration between employers and workers' representatives to identify and implement remedies.
“Addressing discrimination is something that [EU legislation] can easily try, and for that, you need to have a good enforcement and good sanction mechanisms. Also, lack of pay transparency is one of the key obstacles to closing the gender pay and pension gap, which can be relatively easily addressed by the legislators,” said Elodie.
Leading the way for corporate responsibility and equity
As a WEPs signatory since 2020, S&P Global sets the standard for corporate responsibility and equity initiatives in the financial sector. With a global workforce spanning 40+ countries, the company operates under five divisions, notably S&P Global Ratings, the largest global rating organization. For over 12 years, it has championed corporate responsibility reporting, releasing impact reports and ESG reports that underscore their dedication to transparency through adhering to WEP Principle 7: Measurement and reporting.
Recognizing the imperative of addressing gender equality issues on a global scale, the company navigates diverse regulatory landscapes. Its integrated approach sees the Corporate Responsibility team working closely with the Diversity, Equity, and Inclusion (DEI) team, ensuring a holistic strategy to tackle intersectional issues. It also produces DEI-specific reports, providing insight into their impacts, risks, and opportunities related to DEI efforts. By reporting on both corporate responsibility and DEI initiatives, the company aims to provide stakeholders with a comprehensive understanding of their commitments and actions in these areas.
This commitment to transparency extends to compliance with EU regulations, which present challenges for multinational organizations like S&P Global. Despite the complexities, Alyson highlighted the opportunities it brings to approach gender equality initiatives more holistically, including:
- Opening new conversations: Compliance fosters discussions within companies on managing, strategizing, and governing gender-related data. It also encourages inclusive supply chain policies and engagement standards, as per Principle 5.
- Learning from EU peers: Non-EU organizations benefit from observing and learning from EU-based counterparts navigating compliance.
- Collaborative approach: Collaboration is essential as there is no predefined compliance model. Materiality drives prioritization through a robust materiality process.
- Transparency over perfection: Prioritizing transparency in compliance emphasizes reporting on gender disaggregation, including categories for non-binary individuals and those choosing not to disclose. This allows companies to showcase progress and engage stakeholders collaboratively toward gender equality goals.
What next?
As companies begin to comprehend? The complex regulatory landscape and advance on gender equality initiatives, aligning with the WEPs can showcase companies’ dedication to transparency and accountability to gender equality.
By embracing and implementing the WEPs, private companies not only demonstrate their commitment to gender equality but also position themselves as champions of fairness and inclusivity in the workplace, marketplace and community. Through collective efforts to promote transparency, companies can drive meaningful change and contribute to building a more equitable and sustainable future for all.
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Find the recording of this session here.