Gavin Lewis, managing director at BlackRock and co-founder of #TalkAboutBlack, has warned the lack of black people within financial services is not only an HR issue but one that carries business risk for firms that do not address it.
Speaking at ETF Stream’s ETF Ecosystem Unwrapped event, Lewis (pictured), who has been instrumental in driving awareness about the stark racial inequalities in finance and wider society in the UK, said the arguments for including more black people in the finance industry is viewed as an HR problem but this is the wrong way to look at it.
“Being blunt, some people do not care about this issue from an HR perspective, yet we are asking them to, it is broader than that,” he said. “To actually move the dial is difficult because some firms are not ready to align their businesses on a values basis because at the end of the day, they are still businesses.”
In order to address this, Lewis stressed the importance of viewing racial inequality as a business risk that could have a negative impact on firms if not tackled quickly.
Diversity of thought is a well-documented phenomenon which carries a strong business case. According to research conducted by McKinsey, companies with an ethnically diverse executive team were 36% more likely to deliver outperformance than companies in the bottom quartile.
“Corporations need to accept there is a wider societal issue here. The ones that take a positive approach to racial inequality are going to have a greater impact,” Lewis continued. “At the C-suite level, they understand this imperative but where it gets lost is in the day-to-day management of individuals so what the industry needs to do is stop it being only an HR issue.”
Furthermore, Lewis highlighted five areas – or ‘kinks in the hosepipe’ – that needs to be tackled if the financial services industry is going to make any progress.
Highlighting the challenge facing the industry, just 1% of fund managers in London identify as black despite 13.3% of the population being black, according to data from #TalkAboutBlack.
The five areas of focus he highlighted are:
- Socio-economic circumstances
- Educational underperformance
- Barriers to financial services
- Inability to progress once hired
- Lack of C-suite leadership
“These five kinks in the hosepipe stop talent from reach its end destination,” he warned. “For us at #TalkAboutBlack, we want to systematically unkink these issues which means launching school programmes in disadvantaged areas, mentoring early professionals and C-suite leadership programmes.”
Overall, he called on financial services to ensure the murder of George Floyd in the US last year is a catalyst for change and does not just become another event that occurs every 20 years.
“We have a window here,” Lewis concluded. “We owe it to the next generation to solve this issue so they do not have to.”