Navigating the FCA’s DEI data disclosure: A comply-or-explain approach

The corporate world is evolving, and diversity, equity, and inclusion (DEI) are at the forefront. The UK’s Financial Conduct Authority (FCA) isn’t just watching from the sidelines; they’re setting the pace, urging listed companies to be more transparent about their diversity data.

In this article, we’ll dive deep into the FCA’s latest rules and the broader DEI landscape. 

And for those feeling overwhelmed? Diversio’s DEI reporting software offers a helping hand, making data collection and reporting a breeze. Stick around, and you’ll see DEI isn’t just about meeting standards—it’s a game-changer in the business world.

Quickly though, what is DEI data disclosure? DEI data disclosure is the transparent sharing of a company’s diversity, equity, and inclusion metrics, providing a snapshot of its commitment and progress in these areas. It’s a key tool for accountability and insight into the modern corporate landscape.

The regulatory shift: UK & US in focus

The DEI wave isn’t just a UK phenomenon; it’s resonating globally. The FCA has made its move, rolling out new rules that push for clearer diversity data disclosure. Their message? Companies need to be open about where they stand on DEI.

But let’s hop across the pond for a moment. The U.S. isn’t trailing behind. The Securities and Exchange Commission (SEC) has its eyes on Nasdaq-listed companies, setting its own standards for DEI transparency.

Piecing it all together, there’s a clear global momentum building. From the UK to the U.S., regulators are championing DEI, pushing for greater accountability and crystal-clear transparency. The future looks diverse, equitable, and inclusive.

FCA’s bold moves: Setting the bar high

When it comes to championing DEI, the FCA isn’t playing it safe. They’ve rolled out a Policy Statement that’s more than just words—it’s a call to action. The focus? Amplifying transparency, especially when we talk about diversity in boardrooms and among top-tier executives.

But here’s where it gets interesting. The FCA is championing a ‘comply or explain’ stance. Companies can either align with the DEI standards or be ready to explain why they haven’t. It’s a nudge, pushing firms to either step up or speak up.

And the FCA isn’t vague about its expectations. They’ve set clear diversity targets, emphasizing the need for companies to disclose their data. It’s not just about numbers; it’s about painting a clear picture of where a company stands on DEI.

Who’s in the spotlight? Scope & applicability

So, who exactly needs to pay attention to the FCA’s new Listing Rules? Well, it’s a mix.

  • If you’re a UK or overseas company with equity shares listed on the UK Official List, either premium or standard, you’re in. This includes closed-ended investment funds and sovereign-controlled companies. 
  • But if you’re an open-ended investment company or a shell company, you can breathe easy; you’re not on the list. 
  • And for those dealing with listed debt or other securities like securitized derivatives, you’re off the hook too.

Now, let’s talk about timing. If your financial year kicks off on or after  April 1, 2022, you’ll need to include these disclosures in your annual report. Here’s a pro tip: the FCA is giving brownie points for early birds. If your financial year started before that date, they’d love for you to jump on the bandwagon early.

Zooming out a bit, this isn’t just a one-off from the FCA. 

Remember their Discussion Paper from July 2021? It was their first shoutout to the financial sector about ramping up DEI efforts. And with these new Listing Rules, it’s clear they’re walking the talk. It’s likely that they’re also prepping to drop a Consultation Paper this year, which might rope in even more firms, beyond the listed ones.

In short, the FCA’s net is wide, and its message is clear: it’s time for the financial sector to focus on DEI.

Across the pond: The US’s Nasdaq rules

While the UK’s FCA is making waves, the U.S. isn’t sitting still. The Securities and Exchange Commission (SEC) has given the green light to Nasdaq’s fresh listing rules, all in the name of promoting diversity.

Companies listed on Nasdaq are now required to have, or at least explain the absence of, diverse directors. This isn’t just a ‘nice-to-have’; it’s a move to ensure companies reflect the diverse world we live in. 

The expected outcome? A broader range of perspectives in boardrooms leads to better decision-making and more inclusive corporate cultures. 

The bigger picture: DEI in the legislative arena

The legislative landscape is undergoing a transformative shift, with DEI at its core. This isn’t about sprinkling in a few new rules; it’s a global movement demanding genuine corporate accountability. Take the Racial Equity Audit, for instance. These aren’t just cursory checks; they’re deep dives into how company practices affect various racial and ethnic groups, ensuring businesses genuinely embody their DEI commitments.

And here’s where it gets compelling: shareholders are stepping up. Their demands are resonating louder than ever:

  • Over half of Apple’s shareholders supported a civil rights audit proposal in early March 2022.
  • Racial Equity Audit proposals at giants like Johnson & Johnson and Citigroup Inc. garnered the backing of over a third of shareholders in December 2022.

The message is clear. Shareholders crave transparency and accountability. Their growing influence is pushing companies not just to disclose, but to take meaningful action. In this dynamic environment, DEI is evolving from a trendy term to an integral business pillar.

How Diversio can help: Streamlining DEI data collection & reporting

Navigating the DEI landscape can feel like a maze, but that’s where Diversio steps in. We’re not just another platform; we’re your DEI partner. Our suite of services and solutions is tailored to help companies seamlessly comply with DEI regulations. From collecting accurate diversity data to insightful analysis, we’ve got you covered.

But here’s the kicker: it’s not just about compliance. With our DEI and diversity analytics & reporting software, you get a holistic view of your DEI efforts. Our tools dive deep, ensuring that the data you collect is not only accurate but also actionable. We believe in the power of data to drive change. So, whether you’re looking to meet regulatory requirements or genuinely transform your organization’s DEI culture, Diversio is here to guide you every step of the way.


DEI isn’t a fleeting trend — it’s reshaping the corporate world. As regulations tighten, companies must act, not react. But beyond compliance, DEI is a cornerstone of innovation and success. It’s time for businesses to see DEI not as a box to tick, but as a value that propels them forward.

What Long-Term Investors Can Learn from the Netflix Walkout

Netflix’s recent controversial special “The Closer” calls into question the organization’s DEI mission and highlights the importance of inclusion in long-term performance.

On October 5th, Netflix released “The Closer” by comedian Dave Chappelle. Dave Chapelle openly called himself transphobic throughout, quipping that “and I pushed her off violently, [be]cause I’m transphobic.”

The special incited employees to blast Netflix on social media and host a virtual (well-publicized) walk-out, with support from celebrities like Angelica Ross and Dan Levy. Netflix suspended one employee and fired another, resulting in prominent coverage from outlets like Bloomberg and the NY Post.

For many employees and customers, Netflix’s support for “The Closer” calls into question the validity and sincerity of the companies’ DEI commitments. This is a problem. A Cone Communications study found that 73% of consumers will stop purchasing from brands that don’t share their view on social justice, and 76% of millennials conduct follow-up research to see if a business’s DEI promise is authentic.

At the same time, 72% of employees would leave their company for a more inclusive one. Given record churn levels, US companies and investors are learning that DEI integration into business strategy is essential for long-term performance.


How Does DEI Shape Company Performance?

At Diversio, we used artificial intelligence to analyze employee reviews and rank public companies for DEI performance. We found that the most inclusive companies outperform less inclusive by a significant margin in 9 out of 11 industries, including Information Technology. When employees feel safe and supported, they are more productive and engaged. Employees are then more likely to remain at the company and help attract top talent. They are more loyal to their company and less likely to engage in labor disruptions, like a walk-out.

This seemingly “soft” factor translates into hard numbers. In the IT sector, we found that companies ranked in the top quintile for inclusion improved their share price by 23% from June 2020 to September 2021, compared to 8% for the least inclusive companies.[1]

The takeaway: When looking at two companies with similar profiles and financial performance, the more inclusive company is more likely to outperform long-term. A more inclusive organization will also be more resilient to social and economic disruptions, like the pandemic or mass turnover. All else being equal, the more inclusive a company is, the lower-risk investment.


How Can Investors Determine DEI Performance of Potential Investments?

Diversity data is essential to evaluate a potential investment. At Diversio, we use our advanced analytics tool to score companies across three metrics: diversity of senior management and board directors, inclusion as reported by employee reviews, and the company’s commitment to do better in the future.

When looking at diversity, it’s essential to look beyond the Board and beyond gender. We find the correlation between Executive diversity and organizational diversity is stronger than the Board and the organizations because executives have a much more significant impact on day-to-day operations and culture.

When looking at inclusion, we look at employee feedback across six buckets: culture, fair management, career development, flexible work options, a safe work environment, and recruiting and hiring. Within these buckets, we look at the frequency of employee complaints about things like harassment, recourse, inclusive leadership, pay equity, and adequate resourcing. Examining these topics gives a picture of the overall inclusion of the company and its pain points.

When looking at commitment, we look at four broad categories: policy and governance, recruiting, employee engagement and organizational transparency, and disaggregated data. It is essential to review these policies in detail to determine whether they are solid and authentic. For example, when it comes to data collection and analysis, we ask questions like whether the company is doing the bare minimum to satisfy regulatory requirements or if it collects (and ultimately acts on) information about multiple kinds of diversity at all levels of its staff.


Moving Toward More Inclusive Investments

The Netflix walkout is just one example of employee demands for inclusion and equity. Investors can and should request data on workforce composition, employee experience, DEI policies, and programs to understand an investment’s future performance and risk. This information should give a clearer picture of which companies are likely to outperform and which investments might require a second look.

About Our Research
Diversio is the people intelligence platform that measures, tracks, and improves DEI. Using AI technology and human expertise, Diversio diagnoses pain points, benchmarks against peers, and creates action plans. Our AI analyzes data from investor portfolios, private organizations, and public companies, including the World Bank, Danone, and Microsoft. Diversio’s tool analyzes 1,200 academically verified strategic solutions based on an organization’s data to select the best to improve DEI.

[1] Performance analysis over the last 12 months of the FTSE100 index and the top 5 and bottom 5 stocks based on the Diversio D&I score ranking. It is a short time period, but it indicates an outperformance of the companies with a high score and an underperformance of the companies with a low score vs the overall index. Source: Yahoo Finance per June 30th, 2021. The data is based on net returns.

The Great Resignation

“The Great Resignation” refers to the recent movement of employees leaving their current jobs for more money, greater flexibility and an overall better work experience. With this shift, businesses feel the pressure to attract and retain talent more than ever, and the competition between firms is at an all-time high as potential employees demand more than just the primary benefits traditionally offered.

How This Affects Your Business

During COVID 19, many businesses switched to either fully remote or implemented a hybrid schedule. Employees experienced the ease of working from home and enjoyed a more flexible schedule that was previously unattainable. Now that businesses are returning back to normal, employees are reevaluating their current positions. According to NPR, “As pandemic life recedes in the U.S., people are leaving their jobs in search of more money, more flexibility and more happiness. Many are rethinking what work means to them, how they are valued, and how they spend their time.”

People are demanding a more inclusive and flexible working environment. The practices, cultures, and benefits companies previously offered are no longer acceptable to this post-pandemic audience. “New data shows that 27% of venture capital, corporate venture capital and private equity firms lost a partner or key recruit in 2021, according to a recent J.Thelander-PitchBook survey of more than 760 respondents,” stated in Pitchbook.

What Can You Do?

As the Great Resignation wave continues to increase, employers should be reminded to implement a plan to provide a more diverse, equitable, and inclusive workplace. Simply vocalizing about diversity and inclusion is no longer enough. Employers must deliver a quantifiable solution to improve DEI.

Here are some tips to attract and retain talent:

  • Create and nourish an inclusive culture
  • Develop a flexible schedule for employees
  • Commit to reducing bias in the workplace
  • Provide opportunities for growth & career development

How Diversio Can Help Your Company

Our mission is to provide organizations with the right tools to improve DEI in the workplace. By using AI and data analytics to track, measure, and improve DEI, we can ensure companies take the correct steps to provide a more inclusive work environment. Our Workforce Dashboard gives you powerful insight into the state of DEI in your company, allowing you to quantify experiences, uncover biases and identify solutions.

To learn more on how you can make your workplace more inclusive, visit our website