Inclusion riders for business - why not?

Oscar-winner Frances McDormand wants diversity written into Hollywood contracts. Ethical investors could do the same.

by Adam Gale
Last Updated: 05 Mar 2018

Hollywood wouldn’t exactly be the first place you’d think to look for inspiration on solving gender inequality. There’s a reason movements like #metoo originated in Tinseltown: the representation and treatment of women in the movie business have been frankly abysmal.  

Yet few industries have the power to prompt change like show business. And being creative types, they do occasionally come up with some intriguing ideas.

One such idea is the inclusion rider, a concept that Frances McDormand popularised – but helpfully did not explain –in her acceptance speech last night for the Best Actress Oscar.

We’ll do it for her: an inclusion rider is a clause in a major actor’s movie contract, stipulating that a certain percentage of the cast and crew should be from under-represented groups, which in films absolutely includes women.

The academic Stacy Smith came up with the idea a couple of years ago, after discovering that only a third of speaking roles in films made between 2007 and 2015 were for female characters, and only 4.1% of films were directed by women.

Inclusion riders for business

Could the concept have legs in the business world? After all, our efforts so far to close the gender pay and promotion gaps have been achingly slow.

The average man still earns 9% more than the average woman in full-time work, and there are still only seven women running FTSE 100 companies. Even the progress made in raising the proportion of women on boards above 25% is underwhelming, when you consider that the vast majority of new female appointments were non-executive directors.

The only players with sufficient clout to force inclusion riders on businesses are investors. There are investment houses and funds that specialise in green or ethical finance; there’s no reason others couldn’t insist on certain levels of representation from the businesses they work with.

That would create a powerful incentive for businesses to address diversity as a matter of urgency. Money has a way of moving people, even more than popular or political pressure.

 There are already funds out that only target inclusive companies, for example the Pax Ellevate Global Women’s Leadership Fund or the Barclay’s Women in Leadership ETN. But #metoo provides momentum for this to become the norm, not the exception.

Of course, you could say that if the investment world want to make a real change, it should start at home: gender inequality is rife in financial services. You could also argue that targets simply encourage canny HR chiefs to game the system, rather than working on meaningful shifts in attitudes and behaviour.

But investors have clout, and therefore an opportunity to make a real difference, whether that’s through inclusion riders or more conventional methods. And the more pressure for change comes from different directions and stakeholders – investors as well as employees, customers as well as government – the faster change will come.

Image credit: Elena Zaxarova/Shutterstock

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