In 2016, ANZ Bank launched a clever advertising campaign that turned the spotlight on the pay gap between women and men.
In the television ad, boys and girls were given the same household chores, yet the girls were paid less than the boys, “just like in the real world”.
The gender pay gap could soon pose a reputational risk for companies, as new legislation introduced into the Senate seeks to publicly report the gender pay gap of companies with 100 or more employees.
It’s part of a growing international corporate reporting movement to assess the current and future success of companies based on more than their financial performance.
There are mounting expectations from industry stakeholders, such as investors and consumers, as well as governments and regulators, for businesses to evidence the action they’re taking to look after people, the planet, and profits – the new triple bottom line – Environment, Social and Governance (ESG).
Today, a businesses’ ESG goals and outcomes are influencing where institutional investors put their money, the products consumers purchase, the organisations businesses want to supply to, and the places people want to work.
New era of gender pay gap transparency on the horizon
Stakeholders value transparency. Australia’s veil of wage secrecy is about to be lifted, making life very uncomfortable for the company CEOs and boards who pay their male employees more than their female employees for the same job.
Currently, Australian women earn $253.50 less per week than men for the same full-time role. That’s more than $13,000 per year, not including super, which women also have less of when they retire.
Ahead of International Women’s Day 2023, the Albanese Labor Government has taken steps to turn the floodlights on the gender pay gap in corporate Australia by introducing the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023.
The Bill delivers on Labor’s 2022 election commitment to close the gender pay gap through improved corporate transparency and to implement recommendations from the 2021 Review of the Workplace Gender Equality Act 2012.
Company-level public reporting to accelerate action to close gender pay gap
Currently Australia’s Workplace Gender Equality Agency (WGEA) publishes gender pay gap data at an industry level.
According to Minister for Women, Senator the Hon Katy Gallagher: “The current approach of publishing aggregate industry gender pay gaps is not creating the transparency, accountability and insights we need in order to close the gender pay gap fast enough.”
Accordingly, the Bill is dismantling this shield of industry anonymity by giving WGEA the authority to publish granular gender equality data at the organisational level on its website.
Employers with 100 or more employees will be required to report against six gender equality indicators every year. These include the gender composition of their workforce and governing bodies, and equal remuneration between women and men.
Employing organisations captured by the Bill will also be required to give their governing body an executive summary of their report as well as industry benchmarking data.
If the Bill is passed, WGEA will publish the first set of private sector employ gender pay gaps in early 2024.
Does your company’s gender pay gap performance pose a reputational risk?
Under the Bill, employers will be allowed to provide a statement to “help explain any context related to their gender pay gap and actions they are taking to address it”.
The potential for public shaming of companies – particularly by media outlets known for turning entity-level reporting into potentially embarrassing industry rankings – will likely be the true driver of corporate action to address the gender pay gap.
The reputational risk from these proposed reporting changes is real, particularly for companies that have failed to take legitimate action to address gender inequality or to implement well-considered and evidence-based Environmental, Social Governance (ESG) strategies.
Workforce diversity and equality are important aspects of the social component of a company’s ESG goals.
Gender pay equality a social component of ESG reporting
Concerns about gender pay reporting could signal a broader issue with a company’s ESG commitments and credentials – another area where the Commonwealth Government and regulators are examining international standardised mandatory reporting requirements.
While company gender pay gap public reporting may not commence until next year, it will be based on data from the reporting period ending 31 March 2023.
Organisations would therefore be wise to work with corporate communications experts now to develop an accurate and authentic narrative around their gender pay gap performance and strategic commitments. Importantly, this may need to include an acknowledgement that your organisation hasn’t done enough and the steps you’ll be taking to close the gap in your workplace.
The Bill has been referred to the Senate Finance and Public Administration Legislation Committee for review. The committee is due to report back to Parliament by 16 March.
It is therefore a case of watch this space for the final outcome.
BBS has more than 30 years’ experience looking beyond the horizon to help organisations anticipate, prepare for and respond to change in order to maintain the loyalty, trust and confidence of their clients, customers and stakeholders. Contact us today for a reputational risk analysis and strategic communications advice.