Our mission at Big Society Capital is all about system change: changing the way investment flows to support organisations that improve lives. A risk with trying to change systems is that we could easily build new models that replicate the bias, unfairness and inequality of the old. This is why thinking about equality, diversity and inclusion is fundamental if we are to succeed.
You can see a summary of what we have already been doing on these issues here. At the start of this year we began a review of our strategy which included a strand looking at how we could contribute to greater equality. Part way through that work Covid-19 struck, highlighting and exacerbating existing problems, for example through the disproportionate impact of the pandemic on BAME people. The killings of George Floyd and Breonna Taylor and the global reaction to them then shone a sharp light on how racial injustice is built into the systems that we are part of and are trying to change, and prompted extensive discussion and reflection among our team. We have also received specific feedback through the recent Quadrennial Review for example on collecting and publishing more data on which organisations and communities are benefiting from our investment. It is clear we need to do more.
Specifically we need to: be clearer about how we can address underlying structural inequalities (in particular around race, gender and income), hold ourselves accountable to high standards in how we operate internally, and contribute to building understanding and ability to act in the broader sector. We are using three principles to guide our work.
The first is intention: making deliberate choices about what we are going to do and how we will know when we have made progress.
The second is transparency: collecting and publishing data where possible.
The third is building capacity with and for others rather than trying to do everything ourselves. We do not yet have all the answers and are still developing our plans.
We hope that these three principles will help us to make progress.
We will apply these principles across four areas. The first is whether we live up to high standards internally and are addressing issues raised by the Social Investment Diversity Forum. Data on the composition of our senior team and Board (see graph below) shows that overall we are not as diverse as we should be. I am personally very aware that we are an organisation where white, male, highly-educated voices can be dominant. We have reduced our gender pay gap but it is still too large. We are now working with a specialist external organisation to help us set clear priorities for next steps.
The second is ensuring our investment strategy and processes support equality and diversity. Examples of existing investments include Fair by Design focused on income inequality, Women in Safe Homes focused on gender and Big Issue Invest’s Impact Loans England II which targets BAME and women-led VCSEs, with a focus on BAME. We would like to make more investments that further address racial justice and other inequalities, and will work with funders who, unlike us, can offer the grants that are often needed to develop such new ideas. For any such specific funds we aim to develop the best metrics we can for tracking delivery against our intentions. We already include diversity as part of our due diligence for new investments and are reviewing our tools and processes to ensure we reflect these elements properly.
The third is around how we manage and report on our portfolio. We intend to develop greater transparency but have a way to go and our current data is limited. The data available, covering only a sample of the funds we invest in, indicates that women and BAME people are underrepresented on senior teams and investment committees (see graph below). We currently have limited data on the leadership of the front-line organisations to which funding ultimately flows, as well as the communities and people who they support, and this is an area we want to improve. There are a few excellent examples in our portfolio, for example Bethnal Green Ventures put much of the tech industry to shame by showing 52% female founders and 35% BAME founders in their portfolio. Thanks to the Social Investment Business and other partners, we are collecting and publishing similar data for the two main funds we are backing to respond to Covid-19: the Resilience and Recovery Loan Fund and the Community Investment Enterprise Facility.
The fourth is our role as a market builder. In this capacity we will support and amplify what others are doing and improve the tools we offer, including updating the Outcomes Matrix to better account for equalities, adding diversity and inclusion as a clearer element in the Building Blocks toolkit we provide for fund managers and adapting our training provision.
This blog summarises where we are on equality, diversity and inclusion now. We are not at an end point, and perhaps never will be. We are developing our understanding, and will be establishing clearer objectives, priorities and data in each of the four areas. We will continue to share our progress as well as what we learn from the inevitable mistakes along the way. While I am Interim CEO I will continue to make this a personal priority. If you have ideas for action we could take, and in particular if you are developing an investment fund that addresses the issues raised above, please get in touch.
In February 2020, we asked a sample of 25 of our fund managers to provide gender and ethnicity diversity data on their Exec teams and Investment Committees. The data shown here is the aggregated sample of 12 managers that provided this data to us. Please note that the sample size is small and therefore may not be representative.
Going forward our intention is to collect and publish this data annually from across our portfolio.
For this sample, women are underrepresented on both Exec Teams and Investment Committees compared to 2011 Census data.
For this sample, BAME representation on Exec teams is broadly in line with 2011 Census data, however, BAME groups are significantly under-represented on Investment Committees at just 7% compared to 13% in the UK population. Across both Exec teams and ICs, individuals with mixed or multiple ethnicities are over-represented.