Come As You Are: Diversity, Equity And Inclusion Push Is Helping India Inc. Boost Bottom Line

A diverse workforce is a dynamic one and brings to the table varied skills, views and perspectives. Experts agree that DEI is great for business. However, striking the right balance between optimally harnessing it for gaining a competitive edge over others, vis-a-vis the challenges that addressing diversity, equity and inclusion may pose for businesses, is not exactly an effortless task
Diversity, Equity And Inclusion
Diversity, Equity And Inclusion

In January this year, American billionaire Bill Ackman wrote on X that diversity, equity and inclusion (DEI) policies were “inherently racist” and “illegal” even though they claimed to “work on behalf of the oppressed”. His views were echoed by Tesla and SpaceX CEO Elon Musk. Since then, Tesla has omitted all outreach to minority communities in its 10-K filing—the yearly report publicly traded companies file detailing their performance over the past year with the United States Securities and Exchange Commission.  

This pushback to DEI is fairly recent and stands in contrast to the Indian mood around DEI which is shaped by the idea that diversity and inclusivity foster excellence. India is a champion of DEI in principle, which is quite understandable given the amount of diversity an average Indian navigates in their daily lives.  

A diverse workforce is a dynamic one and brings to the table varied skills, views and perspectives. Experts agree that DEI is great for business. However, striking the right balance between optimally harnessing it for gaining a competitive edge over others, vis-a-vis the challenges that addressing diversity, equity and inclusion may pose for businesses, is not exactly an effortless task.  

It needs careful consideration of the context and how it aligns with business goals. The policies and initiatives around DEI should be “tailor-made to suit the unique needs and cultural contexts of the workforce”, says Judy Manjlekar, director (people and culture), India & APAC at Technip Energies.  

Data from top 30 firms listed on the BSE as per market cap in the financial year ended 2023 shows that of the total workforce engaged in these firms, 77.31 per cent identify as males, 22.62 per cent as females and 0.59 per cent as others. The representation of women in board of directors and key management personnel roles stands at 15.28 per cent, according to Complykaro, a Mumbai-based compliance service.  

Good for Business  

A report by Aon and Nasscom titled The DEI Landscape in India Inc.: Bridging the Gap between Rhetoric and Reality states that DEI is a “strategic business imperative” rather than a “nice to have initiative”. Nearly 95 per cent of the 224 participants say DEI policies make business sense and align with wider expectations regarding the moral imperative to comply. A 2020 McKinsey report stated more diverse companies were more likely to outperform their peers on profitability.  

So how exactly do DEI initiatives help businesses grow?  

Hardeep Singh Puri, the Union Minister of Urban Development, said in an X post in December 2020 that India can become a $5 trillion economy by 2025 and that as per McKinsey’s estimates women empowerment and gender parity is expected to boost India’s GDP by $800 billion by the year 2025. DEI initiatives have the potential of playing a crucial role in this.  

Jaya Singh Panda, chief diversity officer at Tata Steel, says, “By opening opportunities to a more diverse pool of candidates, companies can tap into a wider range of skills and expertise, which can enhance their overall talent pool.” She says, “Having better gender diversity among frontline professionals can also help companies enhance productivity, innovation, and creativity, improve their customer focus, and improve risk management capabilities.” 

Cases in point are Tata Steel’s Woman@Mines and Tejaswini 2.0 initiatives, Panda says. According to Panda, both these initiatives have ensured technical training to women workers in core jobs in mines and an increase in deployment of women as an integral part of the workforce, which has certainly helped tap into a pool of talent that had conservatively remained unexplored. Tata Steel has now on-boarded over 100 women as heavy earth-moving machinery (HEMM) operators, she says.  

Similar initiatives have been undertaken by businesses across sectors to harness diverse pools of talent and create a more diverse talent base. Harish Iyer, head DEI at Axis Bank says the private sector bank has launched initiatives such as “HouseWorkIsWork” —which challenges traditional hiring templates by acknowledging the rich life experience of homemakers of all genders—and “ComeAsYouAreCharter”, an initiative inviting same sex partners open joint savings accounts or term deposits and list each other as nominees.  

Akshay Tyagi, head of diversity, equity & inclusion at The Lalit Group, says DEI in hospitality is fundamental in shaping guest experience and organisational culture. “Our current workforce demographics with over 200 LGBTQIA+ team members, 150 people with disabilities and 15 acid attack victims makes us a thriving community,” he says.   

“We also work with people from neuro-divergent communities under project Apna Heera which attempts to create an ecosystem for people with learning difficulties, autism, cerebral palsy and ADHD [attention deficit hyperactivity disorder]. Presently, 20 of our employees belong to the autism spectrum, two of our pianists have visual impairment and over 100 of them have speech, hearing and learning disabilities,” Tyagi adds. 

A 2022 Wellbeing Programmes India Survey by consultancy firm Willis Towers Watson found that of 210 employers, 71 per cent were offering DEI initiatives related to inclusion and diversity training. A similar percentage of them had accessible office spaces and gender-neutral workplace communication. Sixty-two per cent of surveyed employers had programmes targeted at lifestyle, health and wellbeing of employees, their spouses and parents.  

The survey found businesses were trying to understand their employees' sphere of influence and then provide specialised programmes to these influencers, such as coming up with financial initiatives and disseminating information around how families take financial decisions.  

Organisations that prioritise DEI have employees who are nearly 2.4 times less likely to quit, according to BLISS (Bias-Free, Leadership, Inclusion, Safety and Support) Index built by BCG. “For Gen-Z and millennials DEI are critical factors at work. It is therefore imperative that organisations ensure the same so that they can attract and retain the right talent,” says Roshni Rathi of BCG. 

Diversity and inclusion in senior management roles, among boards of directors and key personnel managers reflect better decision-making and nearly 19 per cent higher innovation than companies which have below-average leadership diversity. Additionally, when senior leaders are committed to DEI in an organisation, 84 per cent employees would want to be retained, claims BCG.   

The ESG-DEI Tie  

The 2023 Aon & Nasscom Report says that with 53 per cent of 224 companies included in the study conducting DEI audits to ensure gender-agnostic policies, 25 per cent providing employees upskilling opportunities and a mere 31 per cent carrying out pay equity analyses, a lot remains to be done to ensure inclusion, equity and harness diversity of the workforce.  

DEI has gained more steam of late as it is seen as presenting an opportunity to address Environment, Social and Governance (ESG) compliance requirements. Both DEI and ESG work to build a sustainable workforce, sustainable environment and sustainable governance by being people-centric in their approach. ESG straddles many issues and DEI initiatives can be understood as traversing each of these elements. For instance, safety and health are issues that typically fall under the aspect of environment but have significant social impact. 

The Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Reporting (BRSR) framework in 2021, aligning the sustainability reporting format with nine principles of National Guidelines for Responsible Business Conduct (NGRBC). BRSR serves as an effective means of conveying a company’s non-financial disclosures, representing the next phase in ESG reporting progression, says Vishal Kedia, founder and director, Complykaro. 

On July 4, 2023, an amendment was introduced in the Credit Rating Agencies Regulation (CRA), 1999. Under the provisions of this regulation, SEBI issued the ‘Master Circular for ESG Ratings Providers’ on July 12, 2023, which delineates ESG parameters in the Indian context. This includes social parameters including both inclusive development and measurements of diversity.  

As defined within the ambit of this circular, organisations must disclose their contribution to inclusive development by sharing data around creation of jobs in small towns and percentage of input materials procured from Micro, Small and Medium Enterprises (MSMEs) and small producers in India. For disclosures around diversity, the circular mandates that wages and salaries percentage as per gender and job creation and infrastructure conducive to differently abled individuals need to be disclosed. 

This is a movement towards providing a uniform parameter around ESG ratings which addresses some aspects of DEI. But much remains outside its ambit. One interesting aspect of the ambit is the inclusion of the Parivartan or change score alongside core ESG rating as it seeks to map incremental growth towards environment, social and governance outcomes. 

Manjlekar of Technip Energies says a uniform framework to measure DEI initiatives across all sectors in India could significantly enhance accountability, transparency and comparability by providing standardised metrics and reporting guidelines. It would enable organisations streamline data collection and benchmark their performance accordingly while contributing to the creation of more inclusive and equitable workplaces across India, she adds.     

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