The final report presents guidelines on the benchmarking of diversity practices in financial institutions, in compliance with European directives. These guidelines aim to harmonize data collection on the diversity of management bodies, including diversity policies and the gender pay gap. Data collection will begin in 2025, allowing for a triennial analysis of diversity practices at the EU level.
- Document: Final report on guidelines (GL) relating to the benchmarking exercise of diversity practices, including diversity policies and the gender pay gap.
- Author: European Banking Authority (EBA).
- Date: December 18, 2023.
- Scope: Financial institutions and investment firms subject to Directives 2013/36/EU (CRD IV) and (EU) 2019/2034 (IFD), excluding small non-interconnected entities.
- Covered topics: composition of management bodies, diversity policies, gender pay gap at management body level, harmonized data collection and analysis.
- Population: representative sample of institutions and investment firms in the European Union.
- Period: first data collection planned in 2025 with a reference date of December 31, 2024, then every 3 years.
- Volume: 42 pages, including approximately 38 pages provided for this summary.
The EBA final report presents guidelines for a harmonized benchmarking exercise of diversity practices, including diversity policies and the gender pay gap within the management bodies of financial institutions and investment firms, in accordance with the European CRD IV (2013/36/EU) and IFD (2019/2034) directives.
The main objective is to enable competent authorities to monitor trends in diversity, identify common practices, and analyze the gender pay gap at management body level, taking into account gender, age, educational and professional background, as well as geographic origin of members.
Data will be collected via the EBA's EUCLID platform, from a representative sample of at least 10% of institutions by size category in each Member State, with a minimum of 5 and a maximum of 50 entities per category. Collection is on an individual, non-consolidated basis, to reflect the actual composition of management bodies.
The triennial collection, starting in 2025 (reference 31/12/2024), aims to limit administrative burden while ensuring relevant analysis of medium- and long-term developments.
The guidelines specify definitions of member categories (executive directors, non-executive directors, staff representatives), consideration of gender identities (male, female, non-binary), and methods for calculating the pay gap, based on total gross annual remuneration (fixed and variable), with detailed instructions to ensure comparability and data quality.
The report also emphasizes the need to ensure personal data protection, requesting institutions to calculate pay gaps themselves before transmission.
Finally, the EBA plans to publish a benchmarking report at EU level every three years, with detailed country-by-country analysis, to improve transparency and encourage measures promoting diversity and pay equality in the financial sector.
- These guidelines respond to the regulatory obligation stemming from the European CRD IV (2013/36/EU) and IFD (2019/2034) directives which require competent authorities to collect and benchmark diversity practices, including diversity policies and the gender pay gap within management bodies.
- The EBA acts under its founding regulation (Regulation (EU) No 1093/2010) and in cooperation with ESMA to cover financial institutions and investment firms.
- The issue is to ensure harmonized, reliable, and representative data collection on diversity and pay gap to monitor progress and identify good practices.
- The objective is to define a clear framework for selecting a representative sample, collection methods, data definitions to provide, and methods for calculating the pay gap.
- The scope excludes small non-interconnected entities and does not cover consolidated data but only individual data per entity.
- The guidelines aim to reduce administrative burden compared to previous ad hoc collections while improving data quality and comparability.
- Limitations include exclusion of non-EU subsidiaries and non-application to entities not subject to the relevant directives.
Sampling:
- The sample must cover at least 10% of institutions and investment firms by size category in each Member State, with a minimum of 5 and a maximum of 50 entities per category (p. 5-6).
- Categories are defined according to total assets: <1 billion EUR, 1-10 billion EUR, 10-30 billion EUR, >30 billion EUR, plus investment firms (p. 5).
- The sample must remain stable over time to allow trend analysis, with limited adjustments in case of structural changes (p. 5).
Data collection and submission:
- Data are collected on an individual basis via the EUCLID platform (p. 3, 17, 18).
- Selected institutions must submit data every 3 years, starting in 2025, with a reference date of December 31, 2024 (p. 3, 13, 17).
- Competent authorities validate completeness and plausibility before transmission to the EBA (p. 18).
Definitions and categories:
- Management body members classified as executive directors (management), non-executive directors (supervision), and staff representatives (p. 11-12).
- Inclusion of gender identities: male, female, non-binary, according to self-identification (p. 6, 11).
- Definition of geographic origin (minimum 3 years of experience or residence) and professional background (minimum 3 years of experience) (p. 11-12).
Pay gap calculation:
- Based on total gross annual remuneration (fixed + variable), before taxes, including taxed benefits in kind (p. 15-17).
- Variable remuneration considered only if awarded for the current financial year, excluding guaranteed pay, severance payments, etc. (p. 15-16).
- For non-executives paid only by fixed attendance fees, a one-day flat rate is considered (p. 16).
- Separate calculations for executive directors, non-executive directors, and staff representatives, with mean and median calculations (p. 16-17).
- The gap is expressed as a percentage difference relative to men (p. 7, 16-17).
Data protection:
- Institutions calculate pay gaps themselves before transmission, avoiding transmission of sensitive individual data (p. 6, 17).
Governance and compliance:
- Institutions must indicate their governance system (1-tier or 2-tier) (p. 14).
- Competent authorities must notify their compliance with the GL before May 27, 2024 (p. 9).
Public consultation and feedback:
- The consultation lasted 3 months, with 7 published responses (p. 23).
- Main comments concerned implementation timing, gender definitions, proportionality, data protection, sample composition, and clarity of definitions (p. 24-38).
- The EBA incorporated several clarifications and minor amendments without changing fundamental principles (p. 24-38).
- Established facts:
- The need for a harmonized framework for data collection and benchmarking on diversity and pay gap is confirmed by European directives and the EBA mandate (p. 4-5).
- A representative sample is sufficient to produce reliable benchmarks and reduce administrative burden (p. 5, 21).
- Triennial collection is appropriate given the low annual variability of management bodies (p. 3, 21).
- Distinction between executive and non-executive functions is essential for relevant analysis (p. 5, 11, 15).
- Assumptions:
- Self-identification of genders (male, female, non-binary) is reliable and applicable despite national legal differences (p. 6).
- Pay gap calculation based on data provided by institutions is sufficient for comparative analysis (p. 20).
- Interpretations:
- Specific collection of the pay gap at management body level usefully complements existing data on the entire workforce (p. 20).
- Sample stability over time is crucial to detect real trends (p. 5).
- Uncertainties:
- National differences in gender recognition and data collection may limit comparability in some cases (p. 6, 34).
- Pay gaps may be influenced by factors other than gender, including functions performed, limiting direct interpretation of results (p. 36).
- Administrative burden and costs for institutions, though limited, remain to be monitored (p. 24, 34).
- The EBA concludes that the guidelines are necessary to harmonize the collection and benchmarking of diversity practices and the pay gap in the European financial sector (p. 22).
- Implementation via the EUCLID platform will allow more efficient and less burdensome collection than previous ad hoc exercises (p. 22).
- The representative, stable, and well-defined sample ensures statistical relevance while limiting burden for institutions and authorities (p. 5, 22).
- Institutions and authorities must respect notification and data submission deadlines, with the first collection planned in 2025 (p. 3, 9, 13).
- The EBA will publish a benchmarking report every three years at European level, including country-level analysis, to promote transparency and encourage good practices (p. 3).
- The guidelines include clear definitions and precise instructions to guarantee quality, comparability, and data protection (p. 6, 11-17).
- The EBA recommends competent authorities inform selected institutions at least 3 months before collection (p. 13).
- Feedback from the public consultation led to clarifications and minor amendments, without modification of fundamental principles (p. 24-38).
- These guidelines must be integrated into the practices of competent authorities and concerned institutions from June 27, 2024 (p. 12).
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