TPR tells directors to consider diversity when making decisions – Law and regulation

Ready to go: Trustees should think about the diversity of their scheme’s members and ask themselves whether they’re “inherently disadvantaging” some members with their decisions, according to David Fairs, the pension regulator’s executive director for regulatory policy, analysis and guidance.

In 2021, the regulator implemented a new diversity and inclusion strategy, which aims to increase diversity on boards of directors. He also launched a new board diversity task force.

A blog written by Fairs in December also pushed for “tough board decisions” on diversity.

In a podcast discussion with Herbert Smith Freehills partner Samantha Brown, Fairs highlighted the need for boards to consider how the diversity of their membership might influence the actions and decisions they might make.

“Do they inherently disadvantage some members, perhaps unintentionally, who, if they thought about it carefully, would make the same decision knowing it might not be understood or help all of their members equally?” Fairs asked.

Directors should think about the diversity of groups of directors and even of their advisers and professional directors who could be integrated into their structures, he added.

The regulator is putting tools in place to help directors with role descriptions, finding ways to attract those who might not have considered entering the profession or thought they wouldn’t be the welcome to the role.

“They need to think about the onboarding process for directors,” Fairs said.

“Is this unintended bias for or against certain members [exist]and does this deprive the supervisory body of certain skills, expertise or specific knowledge?

“Time and time again you see fiduciary roles being framed in terms of ‘many years of financial, legal or investment experience’. But I think you have to ask yourself, does it allow you to have knowledge about communication via social media? Who understands climate change, natural capital or sharia funds? »

Boards should also consider whether they make roles accessible to people with disabilities, family responsibilities and those working part-time, he added.

Last year, TPR said it aimed to reduce its internal pay gaps for underrepresented groups and increase the diversity of its workforce by 20% by 2025.

The regulator also said it was looking to increase the representation of black and ethnic and LGBT+ minorities on its leadership and management teams, to at least 15% of their senior teams within two years.