November 28, 2023


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South Africa makes strides toward embracing ESG, but closing the gender gap remains a challenge in financial institutions

By Sakhile Dube

In recent years, South Africa has seen a growing recognition of Social and Environmental Governance (ESG) issues. Some of the key issues that have received significant attention are the legacy of apartheid and the ongoing efforts to address racial inequality and social injustice. Many companies have recognized the need to address these issues as part of their ESG strategies. And there has been a growing focus on diversity, equity, and inclusion (DEI) in the workplace more broadly.

According to Sanlam’s ESG Barometer, a company with poor social indicators, including DEI, may eventually face an internal or external backlash that would damage profits. As a result, this trend is likely to continue in the coming years, as companies are increasingly being held accountable for their social impacts by investors and other stakeholders.

2020GlobalSouth AfricaDifference
D&I Score53.9856.122.14
Diversity Score28.8232.984.16
Inclusion Score20.8932.4811.59
People Development Score38.2649.1210.86
D&I Controversy score99.4299.490.07
Source: Refinitiv Satrix South Africa Inclusion and Diversity (Refinitiv Satrix I&D Index), 2020

In the Refinitiv ESG database, South African companies perform better on all diversity and inclusion pillar scores when compared to the rest of the world, with inclusion and people development scoring more than 10 percentage points higher.

Despite these statistics, the country is still struggling to deal with systematic inequality and discrimination, particularly against women in certain industries. For example, a report by Deloitte shows that South Africa has made remarkable strides in increasing the number of women across role categories, particularly in next-generation and senior leadership in financial services institutions. However, there is a notable dearth of women in top management and if this situation continues, Deloitte predicts that this segment is likely to stall at its current share of less than 20% through 2030 in financial services.

Source: Deloitte Center for Financial Services analysis of BoardEx LLC data

The improvement of women in the next generation of leadership is also confirmed by statistics from Metropolitan Momentum, a certified top employer in the financial services sector. The company’s figures show that indeed there is a high rise in the number of women in junior management and slightly in middle management category. While Momentum Metropolitan drives aspirational transformation targets, there is still more work to be done to close the gap – especially at senior and top levels. And without a doubt, this is the case for many financial services institutions across the country.

 Top managementSenior managementMiddle managementJunior management
YearBlack%Black female %Black %Black female %Black %Black female %Black %Black female %
Source: Momentum Metropolitan Holdings Sustainability Report: 2022

Breaking the glass ceiling

There is enough evidence to show that FSIs remain male-dominated (particularly white) and there are still significant challenges in access to opportunities and representation of women, particularly black women in the sector. For example, the top 100 FSIs listed on the Johannesburg Stock Exchange still have less than 10% of women in the C-suite section.  Addressing this imbalance will take time, contributing to another 20 years needed to address gender inequity in South Africa..

According to Lettie-Basani Phume, the Momentum Metropolitan Group Human Capital Executive, “the senior and top managers in the financial services typically have 20 to 25 years of experience. Thus, even with our company’s strong and authentic focus on transformation, it takes time to develop a qualified, skilled, and experienced individual in financial services, who would operate at senior and/or top Management.”  And this obviously gives white men an edge because of their background and expertise.

Phume adds that the financial services industry is dominated by specialized skills at the entry-level disciplines such as finance, IT and sales which have historically been a preserve for white male graduates, with black and female candidates only entering these disciplines relatively recently. Even with these changes, women are underrepresented in some specialized disciplines.

In reality, breaking the glass ceiling is proving difficult with a higher percentage of women sitting mostly in the next gen category. Phume notes that “because of the quantum of people at this level (vs at senior leadership), and the scarcity of opportunities at senior management, we have worked hard on having a transformed middle management layer – who will be ready when any opportunity becomes available at senior management and make their way to the top management”.

To make this happen, corporates need to adopt deliberate policies to increase the number of female employees. Phume stresses the importance of having an authentic transformation drive to surpass the targets that are set by the financial industry. She further states that, it should not be all about numbers, but about deep leadership work and building the right culture to enable and support transformation initiatives. And these initiatives may include learning and development, gender pay gap, talent acquisition, retaining female talent, tackling challenges that women face, and the overall support of women in every area that Momentum Metropolitan has found to be impactful.

Dismantling systemic inequalities at the board level

The legacy of apartheid has left a significant impact on the country’s social and economic structures leading to challenges on how to deal with issues of diversity and inclusion in boardrooms.

 A report released by Stellenbosch Business School in 2022, highlights that South Africa has no explicit legislation requiring companies to include women on their boards of directors. However, there are indirect measures to encourage gender diversity on boards.

Some of these include the contentious Broad-Based Black Economic Empowerment (B-BBEE) Act, the Employment Equity Act, the King IV Report on Corporate Governance (application of these codes is voluntary except for JSE-listed companies), and stock exchange listing requirements.

A decade ago, following trends in the United Kingdom, Finland, Australia, and New Zealand, South Africa’s FSIs set diversity and inclusion targets that require companies to have 25% Black Female representation at Board Level. Despite this, the progress has been slow. As a result, the BWASA Women in Leadership Census report recommended a voluntary target of 30% for listed companies as “reasonable and feasible”, with 40% as a stretch target.

Barriers to Diversity and Inclusion

South Africa has a long history of racial and gender discrimination, which accounts for the state of unequal opportunities and limited access to resources by women. In the World Economic Forum’s 2022 Global Gender Gap Index, South Africa does not even make it to the top ten. The country’s progress toward eliminating the gender gap is pulled down by industries that are still male-dominated. This legacy makes it difficult to achieve diversity and inclusion in financial services sector, despite its major contribution to the economy.

Some experts believe that unconscious biases account for the lack of diversity and inclusion during recruitment processes.

According to Nene Molefi, the CEO of Mandate Molefi and a DEI expert, barriers to achieving DEI in workplaces are a result of the lack of commitment, resistance, accountability, and a proper plan. “Without leadership buy-in, DEI initiatives may not be prioritized or given the necessary resources to succeed. And without accountability and transparency, it can be challenging to track progress towards DEI goals and make adjustments, where necessary. And at times, some employees may also be resistant to changes that they perceive as threatening their positions.” Notes Molefi.

This story was written and produced as part of a media skills development programme delivered by Thomson Reuters Foundation. The content is the sole responsibility of the author and the publisher.

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