BOSTON--(BUSINESS WIRE)--March 12th is Equal Pay Day—marking how far into 2024 women need to work to make what men earned in 2023 alone. On the eve of this sobering reminder, Arjuna Capital, Proxy Impact, and DiversIQ have released the seventh annual Racial and Gender Pay Scorecard, ranking how the largest 100 U.S. companies (as well as companies engaged by investors) stack up on pay gap disclosure and performance. As its most comprehensive pay gap disclosure review yet (128 companies), the 2024 Scorecard captures the tremendous momentum in pay gap disclosures since 2016—a 12-fold increase in the number of companies reporting quantitative pay gap data. Over half—53 percent—of companies in the Scorecard are disclosing quantitative data, compared to 25 percent of the S&P 500.
The 2024 Scorecard highlights companies and sectors that are leading the way, including consumer companies Target and Starbucks that earned perfect scores of A+ due to comprehensive disclosures of median and adjusted pay gaps and annual commitments to conduct and publish pay equity analyses. The consumer and financials/REITs sectors lead in disclosure, with 56 percent and 68 percent of companies, respectively, disclosing pay gap data. That’s compared to only 25 percent of companies in the industrial/materials sectors and 20 percent in the energy/utilities sectors.
“Companies are embracing a more transparent, comprehensive approach to pay gap reporting—a shift that goes beyond lip service to create real and lasting change,” said Natasha Lamb, Lead Author and Chief Investment Officer at Arjuna Capital. “Through their equal pay ambitions, smart companies are capitalizing on key performance benefits—gaining a competitive advantage in recruiting and retaining top talent and improving leadership diversity.”
The Scorecard highlights research confirming the performance benefits of disclosing and narrowing racial and gender pay gaps. Companies that provide fair pay and opportunity gain a competitive advantage in two critical areas: recruiting and retaining top talent and improving diversity. For example, 70 percent of Gen Z employees state they would consider switching jobs for greater pay transparency. And pay equity has been shown to lead to more diverse leadership, which is correlated with multiple performance benefits—from radical innovation to better risk management, higher profit margins, stronger return on equity (ROE), and better stock price performance.
“Best-in-class companies are increasingly adopting the Scorecard’s pay gap reporting framework— which has established itself as the gold standard in the marketplace—both in response to stakeholder demand but more importantly because they realize it’s good for business,” said Josh Ramer, Co-Founder and CEO of DiversIQ.
This year, Equal Pay Day falls two days earlier than last year, illustrating minor progress on closing racial and gender pay gaps in the United States. Women in the U.S. earned 84 percent of the wages earned by men last year, a one percent increase from the previous year. Black workers’ median earnings remained the same, at 81 percent of white workers median earnings. Unfortunately, progress towards equal pay continues to be slow, with the World Economic Forum predicting global gender equal pay not occurring for another 257 years. McKinsey projects closing the racial wealth gap could increase GDP by four to six percent by 2028, netting the U.S. economy one to 1.5 trillion dollars. And PwC’s 2023 Women in Work Index estimates closing the gender median pay gap across Organization for Economic Cooperation and Development (OECD) countries could boost the economy by 5.8 trillion dollars annually.
“The median pay gap can reflect not only a lack of equal pay for equal work, but perhaps more importantly, it reflects the lack of opportunity for women and minorities to high-paying jobs,” said Michael Passoff, Co-Author of the Scorecard and CEO of Proxy Impact.
As described in the Scorecard, both unadjusted median and statistically adjusted pay gap data are necessary for a comprehensive disclosure. Median pay gaps assess how jobs and compensation are distributed by race and gender company wide, while statistically adjusted gaps only assess pay gaps for employees performing similar roles.
The Scorecard reviews increasing global regulation mandating companies disclose median pay gap data. For the first year, the Scorecard incorporates data for companies with Ireland operations, as these companies were recently mandated to begin public reporting. The U.K. continues to mandate median gender pay gap disclosures, and the E.U. will begin mandating this disclosure in 2027. In California, companies are now required to report median and mean hourly rates for each job category, separated by race, ethnicity, and sex. Studies illustrate the effectiveness of median pay reporting in narrowing gaps.
Arjuna Capital is a sustainable investment firm that works with accredited investors and institutions to invest their assets with a lens toward sustainability. Arjuna Capital has been recognized for using shareholder resolutions to promote racial and gender pay equity in the tech, banking, and consumer sectors. Since 2016, Arjuna has successfully pressed 37 Fortune 500 companies to disclose racial and gender pay gap data. www.Arjuna-Capital.com
Proxy Impact provides shareholder advocacy and proxy voting services that promote sustainable and responsible business practices. Proxy Impact’s Women’s Inclusion Project engages companies on issues of board diversity, workplace diversity, racial and gender pay gaps, and child sexual exploitation online. www.proxyimpact.com
DiversIQ is the leading provider of public company human capital management (HCM) intelligence with analysts that maintain the industry’s most comprehensive database of real-time HCM, Environmental, Social, Governance (ESG), and Diversity, Equity, and Inclusion (DEI) insights. DiversIQ’s data is used by many of the world’s largest asset managers, advisors, and corporations to benchmark Key Performance Indicators (KPI’s) based on emerging standards, laws, and regulations. www.diversiq.com
