LONDON: Employee perceptions of how hedge funds handle diversity and inclusion have fallen to their lowest level since before 2021, when Reboot Financial Services began its annual report, the financial services campaigning group said on Tuesday.

More than 100 hedge fund workers in the United Kingdom were asked to score how they felt about actions their workplace took to improve ethnic and racial diversity and inclusion, in the Reboot Race to Equality 2024 report, conducted in partnership with research house Coleman Parkes.

Companies in Britain have broadly taken steps to improve the diversity of their workforces, partly as new regulations require disclosure of data such as gender pay gaps, which have shown finance to be one of the UK's most unequal sectors.

Employees answered nine questions about communication, recruitment, culture, career progression, training, mentoring and leadership, resulting in one total overall score between 1 and 100.

Hedge funds in 2024 earned a 64.3 score, the lowest out of all scores in financial services which also included asset management, insurance, investment banking, pensions, private markets and wealth management, said the report.

Insurance earned the highest scores for diversity and inclusion efforts, with pensions coming in as a close second.

Perceptions at wealth management companies also sunk to a four-year low, said the report.

The report was based on a survey of 800 employees between August and September 2024, of various ethnicities (700 ethnic minorities and 100 white employees) who have been working in finance for at least 10 years, the report said.

PRESSURED

Roughly two-thirds of those surveyed said they were encouraged to "inform change and build an ethnic and racially inclusive culture," said the report.

But when asked whether they were able to advocate for ethnic and racial equality in the workplace, almost half said they were pressured against it.

Four in 10 people were told to be cautious about doing so, the report said.

Almost half of ethnic minorities surveyed felt more pressure to stay silent (45%) compared with their white peers (35%), though both groups expressed concerns about retaliation, said the report.

Overall, nearly half of respondents have experienced pressure not to discuss diversity issues and 39% said they "experienced muzzling of diversity advocates over the last two years," the report said.

"With so little progress made to date and given heightened racial tensions across the UK, it seems extraordinary that financial firms’ efforts to improve racial equality are diminishing or under threat," said Baroness Helena Morrissey, chair of The Diversity Project an industry initiative in the UK investment and savings industry.

(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and Jonathan Oatis)