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View: Unlocking innovation and making positive impact through diversity

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View: Unlocking innovation and making positive impact through diversity

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It's undeniable that the graph of diverse representation in companies is on the rise. A little regulatory push like aligning Environmental, Social and Governance (ESG) reporting to GRI standards and SDG goals along with the concrete steps from investors and stakeholders can pave the way for improved diversity and inclusion in Indian companies.

View: Unlocking innovation and making positive impact through diversity
Cultivating diversity necessitates a culture where employees are comfortable and feel valued. Diversity stems from progressive leadership values that offer a professional climate to thrive. In an inclusive, merit-based organisation, men and women are hired at a similar, consistent ratio.
Companies reluctant to recruit women are missing out on talents of half the population.
 
Typically, a diverse workforce employs people from all backgrounds and different spheres, accepts and imbibes differences without discrimination in race, religion, gender, age, and socioeconomic statuses.
Diverse boards and directors bring a valuable range of outlooks, opinions and suggestions on decision-making and problem-solving. Furthermore, diversity presents an opportunity to invite different perspectives and broaden life experiences in the boardroom. And different perspectives give scope to workable solutions while confronting complex problems.
The Companies Act, 2013 says there should be at least one female member on the board. It allows for exploration of these differences in a safe, positive, and nurturing environment.
Many European companies have not only declared their commitment to diversity and inclusion, but they’ve also executed this strategy. For the record, the top companies in France, Spain, Sweden and the UK have an average of approximately 48 percent females in workplaces. So where does India stand in this regard?
Based on ESGRisk.ai's data of Nifty 500 companies listed data, India has an average of 22 percent female in workplaces in global comparison. While this is not a flattering number, India ranks third globally at 39 percent in female diversity in senior management roles as against the global average of 31 percent.
The data also reveals that financial services activities, IT, entertainment, publishing activities, and real estate industries have the most diverse boards.
However, there are indications that diversity, in certain sectors, is pursued as a mere checkbox to meet compliances or the inclusive culture is not strong enough. Industries such as beverages, mining of metal ores, extraction of crude petroleum and natural gas, two-wheelers, crop and animal production have the potential to achieve more on this count. As of now, these sectors face challenges in employing and providing security to women in blue-collared job profiles.
That said, organisations that demonstrate exemplary leadership behaviours unlock diversity rewards. Research conducted over time indicates that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians.
In contrast, companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns. Diverse companies are more likely to win top talent and improve their customer orientation, employee satisfaction, and decision making, leading to a virtuous cycle of increasing returns.
Diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns.
Creating a workplace that supports a diverse workforce is a great example of exemplifying best practices for employee engagement and a positive culture. Employees know their voice will be heard and that they are considered as valued members of the company.
Three Indian companies, Tech Mahindra, Wipro and Dr Reddy’s Laboratories, were included in the Bloomberg Equality Index in the year 2020 which highlights the fact that Indian corporates have set genuinely high goals towards improving inclusivity and diversity at all levels.
Companies such as Axis Bank Ltd and Tata Steel Ltd have incorporated policies and initiatives towards encouraging the Lesbian, Gay, Bisexual, Transgender, and Questioning (LGBTQ) community.
Around 56 percent of these companies have disclosures relating to PwD candidates, though only 0.40 percent of them employ the PwD candidates. Additionally, companies like ITC hotels and Lemon Tree hotels are the leading employers for PwD candidates.
It's undeniable that the graph of diverse representation in companies is on the rise. A little regulatory push like aligning Environmental, Social and Governance (ESG) reporting to GRI standards and SDG goals along with the concrete steps from investors and stakeholders can pave the way for improved diversity and inclusion in Indian companies.
Amalgamating varied experiences, accommodating and leveraging differences facilitate a strong relationship among all stakeholders and allow them to be interconnected. Increased productivity, improved cultural awareness, and an innovative talent pool are by-products of a deep inclusive culture.
Employees or potential clients relate to an organisation more if it represents an inclusive workplace. As it’s rightly said, put variety in one room and you will emerge from the other side with better ideas and be an even better institution.
—Sankar Chakraborti, Chairman, ESGRisk.ai & Group CEO, Acuité. Views expressed are personal
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