1. Gender Inequalities and Corporate Social Responsibility: A Role for Reflexive Regulation? Colm McLaughlin – University College Dublin Simon Deakin – Centre for Business Research, University of Cambridge ESRC – Gender Network (GeNet) Project

2. Introduction We examine equal pay and gender issues in the context of wider debates about the effectiveness of different regulatory regimes: – Hard versus soft law – More specifically the question of mandatory pay audits – We apply a ‘reflexive regulation’ framework to examine the issue of pay audits – Part of a wider project looking at the various pressures on organisations to address gender inequality (e.g. business case, capital market pressures, unions, public procurement, law, etc.) Draws on 40 interviews with: organisations (20), fund managers, unions, and other stakeholders. – Eight private sector organisations, eight public sector organisations, two Universities, two not-for-profit. – Access issues: Private sector firms all ‘diversity-friendly’

3. Equal Pay and Mandatory Pay Audits 30 years after the Equal Pay Act significant pay gap remains (16.4%; 20.8% for private sector) Mandatory equal pay audits??? – Equal Pay Taskforce (2001) – mandatory pay audits – Kingsmill (2001) – voluntary approach mechanisms of corporate governance, human capital management, institutional investors, reputational risk – Women in Work Commission (2005) – no agreement – Discrimination law review (DLR, 2007) – contravenes ‘better regulation principles’; business case arguments Range of public policy supports for voluntarist approach – But, proportion of large private sector firms voluntarily conducting equal pay audits still under half (see EOC and EHRC surveys) – Most firms “do not believe they have a gender pay gap” (EPTF) – → Equality Act (2010) (requirement for large organisations to report their gender pay gap from 2013????)

4. Limitations of a ‘hard’ law approach Dominant discourse: – Encourages compliance rather than real engagement – ‘ Red tape ’ - endless bureaucracy - one size fits all → DLR: “ contravenes better regulation principles ” Law translates incompletely into the economic and organisational spheres – Autopoiesis – systems theory (Teubner, 1992) – Systems are autonomous and closed – Legal system has unique linguistic forms and institutional processes – On-going ‘juridification’ of law = complexity – E.g. equal pay legislation in the UK

5. Reflexive Regulation A shift from substantive to procedural regulation – Involving deliberation by stakeholders – Standards set by law can be modified, within limits Stimulates enforced ‘self-regulation’ – Includes default rules acting as a stimuli for self-regulation A flexible process, but one involving external benchmarking – shared learning – ‘best practice’ – Proactive rather than reactive solutions Law still has a number of roles to play Bridging institutions necessary component – ‘structural coupling’ of the legal and organisational systems – E.g. collective bargaining or employee representation mechanisms

6. Issues and Limitations of Reflexive Regulation Conditions under which this approach might be successful? (‘the frame’) – e.g. disclosure rules ineffective without adequate system of PIs Capacity of the bridging institutions to play their ascribed role – e.g. employee representation mechanisms May ignore conflicting political and economic interests – Deliberation versus distributive bargaining (e.g. equal pay in local authorities) – Law may be framed by business case discourse (efficiency) rather than employee rights → De-politicisation of the law through deliberation

7. Gender Equity and Corporate Governance Growth in CSR reporting, codes of conduct, CSR indices.... Socially responsible investment (SRI) – United Nations Principles for Responsible Investment (UNPRI) – US$14 trillion – UK SRI – €331 billion (tenfold rise 97-01) – US SRI – 13% of all equities – Supported by reporting requirements: SRI Pension Disclosure Regulations: extent to which social ethical and environmental (SEE) issues affect investments Myners Principles: pensions to report investment principles on an annual basis ‘Enhanced Business Review’: aimed at firms, disclosure of SEE information Increase in shareholder activism, – e.g. Unions training pension fund trustees But impact of these developments on employment issues generally, and gender specifically?

8. Limitations of Corporate Governance Extent of institutional activism marginal: – Pension fund trustees conservative and concerned with fiduciary duty: “I was at a meeting the other day and an actuary said that the downfall of the pension fund was when you let women in. This was publicly, in a meeting called by the xxxx pension fund… that’s what an actuary said…… There are some severe barriers to overcome”. (Union official) – NGO and trade unions – disconnect between trustees and the aims of the organisations – Union official on equal pay: £70 million → £70 billion is material interest Hierarchy of CSR issues: diversity issues very low down the list Women on boards raised, but few other gender issues Pay audits = micro managing Lack of transparency and meaningful quantitative information on both institutional side or PLC side – Pensions: Statements of Investment Principles “sit in a drawer”, minimal reporting about how policy is implemented – Limited reporting of employee PIs by PLCs – On gender issues, PLC policies may be reported but rarely the impacts (Grosser & Moon, 2008) – lack of quantifiable information for any meaningful assessment or comparison

9. Pay audits as ‘reflexive regulation’ Mandatory Pay audits = reflexive regulation – Commit actors to a process (analyse pay) not a specific outcome, requires transparency about process and results → might open up deliberation about the pay gap and potential solutions Pay audits in our sample of organisations – All had conducted pay audits but only one private sector firm had shared the results with staff – “We would only do it voluntarily if it would show us in a good light… Without the law we would never do it” (HR Manager, PLC) – Fear of reputational risk (e.g. not-for-profit) and litigation – De facto mandatory in the public sector

10. Mandatory vs Voluntary Pay Audits Mandatory pay audits more effective because of transparency & deliberation – Deliberation leads to deeper analysis, e.g. Issue of appointments – Voluntary process ≠ reflexive No transparency, no deliberation – “Publicly I don’t like transparency, privately I think it can only help” (Diversity Manager, large PLC). – Private sector firms: ‘equal pay not an issue for staff’ – Canadian experience: Effective where unions had a presence – otherwise manipulated by management (Canadian Pay Equity Taskforce, 2004) Benefits of deliberative pay audits can go well beyond pay discrimination – E.g. Part-time staff at one University

11. Role of law in organisations Private sector companies did not see law in any way as a driver – Bridled at the suggestion – “We would very rarely refer to the law as the reason for doing something… our aspiration is best in class approach… We would want to do better than that” – Q Does the law play any role in driving you? A. No, none at all. – → Influence of strong ‘business case’ discourse Upon probing: law as a powerful tool for ‘gender champions’ to change attitudes/behaviours within their organisations (so as a way of opening up dialogue and deliberation within the management team): – “yes, if there was new legislation that came in we would use that to review our existing policies and also as a platform for a change of behaviour as well. So yes, from that point of view it would be a driver”. These firms are leaders in the field → influence on government policy – Strong resistance (hostility) to legal solutions Only one private sector firm had shared the pay audit results with staff – Tension between law and business case – want to be ahead of the law when they agree with the law – but slow to respond to impending transparency requirements

12. De-radicalisation of Gender Equality Organisational resistance to ‘business case’ constraints, e.g. internal targets – “what are women going to contribute that is going to make us more successful?” – Changing culture a slow process → In the interim provide supports, networks, etc. so women can “survive in a political environment [and] play the game” → change women rather than the organisation?? Business values prioritised over rights, e.g. Work-life balance – About changing the work so people can find balance or about helping employees fit the demands of the job around their lives? – “if the pace is relentless, what can we do to help you fit that around your life” – women returning from maternity leave who don’t want to travel and work long hours “give working women a bad press” Most ‘pressing issue’: lack of women in senior roles – Not occupational segregation or low-paid women or...... The “exclusive reliance on management action risks promoting conceptions of equality that are partial and insecure” (Collings & Dickens 1998).

13. Conclusion Strategy of ‘encouraging’ organisations to voluntarily undertake pay audits on their terms ineffective Institutional mechanisms of corporate governance and CSR envisaged by Kingsmill have had minimal impact on gender inequality. A ‘reflexive regulation’ approach has the potential to overcome some of the barriers to both hard and soft regulatory strategies – Mandatory pay audits could fit within a reflexive approach → potential for deliberation and shared learning – Much to be uncovered about the ‘frame’ Transparent, detailed and standardised information What sorts of deliberative mechanisms are needed ? Shadow of current legislation over reflexive law Wider questions about the de-politicisation of equalities