Nest reaffirms long-term commitment to closing pay gap

Nest Corporation has reaffirmed its long-term commitment to increasing diversity and inclusion through the publication of its latest ethnicity and gender pay data. While the reports show room for progress, it also outlines actions the scheme will take to achieve pay parity.

The data as of 31 March 2023 shows that while progress is being made as Nest works towards pay parity, there is still further to go as staff experience both gender and ethnicity pay gaps within the Corporation, with staff movement at both junior and senior levels impacting the data. 

The median gender pay gap was 11% (or £3.69 per hour), an increase of 1.5 percentage points from 2021/22, when the gap was 9.5% (or £3.07 per hour). The median ethnicity pay gap was 18% (or £6.03 per hour), an increase of 6.1 percentage points from 2021/22 when the gap was 11.9% (and £3.79 per hour). 

In 2022/23, Nest had more women than men leave Nest. 41% of leavers were from the upper-mid quartile and upper quartile range, which would have had a negative impact on the pay gap. Additionally, while there were more female new starters this year compared to male, 62% were hired in the lower quartile range.

People from an ethnic minority background represent 27% of the workforce at Nest, compared with around 14% of the general population of England and Wales. Employees from an ethnic minority background continue to be under-represented in the upper pay quartile and over-represented in the lower quartile.

The publication of ethnicity pay data is a recommendation made by the McGregor-Smith Review and while this isn’t a statutory requirement, Nest hopes this practice will be adopted by the wider pensions industry

Commenting on the data, Helen Dean, Nest’s Chief Executive Officer, said:

“I was disappointed to see the figures show that over the past year our ethnicity pay gap has widened. However, I am proud that our workforce continues to maintain a greater representation of employees from ethnic minority backgrounds compared to the proportion found in the UK’s working-age population. 

I am confident we are taking this important issue very seriously, that we have the right approach and that with greater transparency and a targeted, long-term holistic plan, we can close the gap.

At Nest, we work to create an inclusive environment where everyone, including women and people from ethnic minority backgrounds can progress and not be held back by bias or unfairness. We’ll keep finding new ways to do this, and we understand that there are areas where we need to improve. 

We will never become complacent about equality and diversity. I and the rest of the leadership team at Nest will continue working to meet and exceed our targets for representation, which will reduce the pay gap.”
 

Nest’s Diversity Equity and Inclusion sponsor, Chief Financial Officer Richard Lockwood, said:

“While I am disappointed this latest report shows our ethnicity pay gap has increased, we are encouraged by the recent increase in new hires from ethnic minority backgrounds and the initiatives we have designed to both decrease the gap and hire the best talent. We know there’s more to do, but we are fully committed to move in the right direction.

Our latest report reflects our commitment to closing the gender pay gap. We acknowledge the need to support women in higher quartile roles and create a fairer distribution across pay grades. Through improved recruitment practices, workforce development, flexible working, and fostering an inclusive culture, we aim to achieve pay parity. We will continue taking action until equality is achieved.”

Nest has been signed up to the Women in Finance Charter since July 2016 and has twice increased its commitment, from 30% to 50% of women in senior management roles. Currently 64% of Nest’s director-level roles are held by women.

As well as continuing its commitment to the Charter, and continuing to publish its ethnicity pay gap data, Nest will:

• Take positive action to increase the number of women in areas of the business where they are underrepresented and in more senior posts should the opportunity arise. This will be achieved by including statements in job adverts to encourage female applicants and offer development opportunities to women who are underrepresented in different parts of the workforce.
• Continue to use workforce equality and people data to identify areas of intervention and expand data capture across the employee lifecycle. Comparing year on year will tell Nest more about the experiences of staff, and where a positive impact to improve the pay gap difference can be made.
• Launch a mentoring programme for staff from ethnic minority backgrounds to ensure Nest is focused on developing internal talent. — working with senior leaders and people and development team to ensure we focus our efforts on succession planning so that we have a diverse group of future potential leaders
• Make progress towards diversity and inclusion targets and objectives. This includes continuing to exceed the target of gender parity in director-level roles, aiming for at least 30% of its executive team being women and having a minimum of one member of our executive team from an ethnic minority background and a minimum of one director from a Black heritage background by 2025.
• Continue to work toward a target of having a minimum of one member of our executive team from an ethnic minority background and a minimum of one director from a Black heritage background by 2025.
• Focus on development – provide routine training to line managers to support them with managing and understanding diversity, equity and inclusion in the workplace. 
• Develop and promote our line manager hub, updating it with guidance and resources to upskill managers on inclusive people practices.
• Welcome feedback and challenge from the six working groups established for a range of protected characteristics including race and social diversity; LGBTQ+; and disability and neurodiversity.
• Look for opportunities to improve diversity across the wider pensions industry – Nest is currently co-chair of the 30% Club, and signatory to the Diversity Project’s Asset Owner Diversity Charter.
• Continue to use our scale to push for change. Nest’s responsible investment team continues to hold the companies we invest in to account, including on gender pay gaps and pay equity ambitions.

Further details of these and other actions Nest is taking can be found in our gender and ethnicity pay gap reports.