City chiefs must say it loud and clear: DEI is good for business

It has been disclosed that the late Sir Evelyn de Rothschild left his family bank after an investigation into an allegation of sexual misconduct.

The financier, who died two years ago, quit the firm in 2004. He’d been there for 40 years, including 28 years as chair of NM Rothschild, the company’s UK investment bank. He remained a heavyweight, respected figure, as a former adviser to the Queen, a one-time chair of The Economist, and an erstwhile director of the company that owned The Daily Telegraph.

In the same week, following Donald Trump’s onslaught against workplace diversity, it has emerged that bankers in the City are putting pressure on Rachel Reeves to follow the US president’s example. The Financial Conduct Authority (FCA) is considering introducing a formal framework for how companies should manage diversity, equity and inclusion (DEI). The unnamed financiers have approached Nikhil Rathi, the FCA’s head, warning of the ineffectiveness of DEI programmes. Other trade bodies and regulators in professional services are also experiencing pushback.

It’s impossible not to make the connection between Rothschild’s appalling behaviour, not to mention how it didn’t come to light until well after his death, and the attempts to row back on DEI. Is this where those involved in the anti-DEI campaign really wish the City to return to?

Their objection to the proposed framework – in which they have the support of Tory leader Kemi Badenoch – is in having regulation forced upon them. It should, they argue, be up to them how to improve their organisations based on specific corporate circumstances and needs.

That may be so, but the history of the City and wider industry shows that, while some will continue to pursue DEI goals, many won’t. Slippage is bound to occur. Soon, the bad old days, evidenced by Rothschild and other scandals, will be back with us.

While this is of no concern to Trump and his followers in America, it surely should be to UK Plc. It must be stated loud and clear: DEI is good for business.

That’s not an empty boast. Numerous studies prove that greater DEI boosts company innovation and decision-making. It brings different perspectives and experiences, leading to improved creativity. DEI gives companies a better understanding of domestic and global markets that are already diverse.

It lessens the risk of groupthink, enabling and empowering those in management to defy accepted wisdom and tradition, and to profit as a result. Ours is a connected world: wearing blinkers is a restrictive and unfruitful approach.

Customers are people. A business that closes off DEI is saying “We do not care, we don’t believe in fairness and decency.” Is that something a company wants to say?

Almost as one, major league corporate America has fallen in behind Trump. Many of the biggest Wall Street names have declared that they’re reducing DEI. What’s telling is that some are making bold statements in public, presumably in the hope that they will be drawn to the president’s attention and receive his blessing, while reassuring their staff privately that little will change. That does not wash. Companies stand or fall on their declared brand values, on how they behave both in public and in private. They can’t have one and not the other.

It’s also shortsighted. Those Trumpian blandishments are what both existing and would-be consumers and staff see. Gen Z, for one, is likely to be unimpressed by a company proclaiming allegiance to unreconstructed attitudes.

So far, on this side of the Atlantic, no company has broken cover. Those bankers contacting Reeves and the FCA are hiding behind confidentiality. These are not shrinking violets, yet they are presumably afraid of the likely backlash. That must also tell them something: we don’t have Trump over here, we’re not the same, and this is definitely not a case of where America leads we must follow.

Equally, bosses are not going the other way. They’re saying nothing publicly and very little privately, even to reassure their staff. They are not displaying leadership. That has to be worrying.

One CEO who has gone on the front foot is BT’s Allison Kirkby. She sent a thoughtful memo to the 117,000-strong workforce, restating the firm’s DEI commitment. Admittedly, it was for internal consumption, but with that number, her words were certain to leak. Indeed, her note gave the impression of being designed for wider consumption.

The telecoms giant’s first female chief executive said: “It’s been hard lately to see companies and governments stepping back from their commitment to inclusion, equity and diversity. For many of you watching this unfold, I imagine it feels worrying and upsetting.

“It sends the message that these things are optional, temporary or not worth prioritising. I want to be absolutely clear: that’s not what we believe at BT.” Kirkby called on colleagues to bring the firm’s inclusive values to life. “We show up for each other every day,” she wrote, “and remind each other, when you see a difficult headline or a triggering news post: not here, not at BT.”

Kirkby said she was proud of several BT policies, including extended maternity and paternity leave and two weeks of paid leave every year for carers. “I believe we need to be as diverse as the customers we service, to be the customer-centric company we aspire to be, and to be able to live up to our purpose.” She added: “When we determine to be inclusive, we create an environment where everyone, no matter their background or characteristics, feels respected, valued and like they belong. And when every single one of us feels that way, we do our best work.”

If only others would follow suit.