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Our views 30 August 2023

Taking a closer look at gender pay gap reporting

5 min read

Reporting the gender pay gap (GPG) should be easy, shouldn’t it? After all, companies have all the required data already with which GPG is just a simple calculation.

Sadly, it isn’t that straightforward. There are challenges for individual companies, particularly with complicated structures or those operating in multiple countries. But for an asset manager, calculating and reporting the overall pay gap across all the companies in a fund is actually very difficult, as we found when generating our first Sustainable Outcomes report. In the end, we took gender pay gap out of the report altogether. But with this being an important indicator, we wanted to explain why we took it out and what we will do about it. The short version is that we want more companies to report it, and to report it for more of their employees.

What is the gender pay gap?

GPG is a measure of pay disparity at work but is different to equal pay. The GPG is the difference between all men and all women’s average pay, without taking account of role or seniority.

Equal pay refers to the difference between men and women performing equal work, or work of equal value, and is a legal requirement in the UK covered by the Equality Act 2010.

GPGs are primarily driven by gender representation throughout the workforce: so an organisation with an effective equal pay policy could still have a GPG if, for example, most women are in lower paid roles.

Why is GPG important?

GPGs are used as indicators of overall gender equality (equal access to opportunity regardless of gender). All the factors that could affect differences in gender representation throughout the workforce influence GPG: company culture, recruiting practices, progression and development etc.

Achieving gender equality is an important goal in itself – the World Economic Forum estimate it will take another 132 years to close the global gender gap [1] – but there are also benefits for businesses such as improved profitability and better talent attraction and retention [2]. As a result, at least 19 countries, including the UK, have made GPG reporting a legally binding requirement, while the EU’s forthcoming Corporate Sustainability Reporting Directive (CSRD) regulations [3] is expected to expand GPG reporting (alongside many other indicators) to around 50,000 companies as of 2025. The Global Reporting Initiative (GRI) also includes a disclosure on male to female pay ratio in its voluntary standards.

So GPG is clearly an important indicator. But we should acknowledge its limitations. It is one indicator within gender equality, which is itself one aspect within wider issues of diversity, equality and inclusivity, and it is also worth noting the regulations take a necessarily binary view of gender, slightly outdated in a non-binary world. Furthermore, GPG reporting is intended to help reduce pay gaps and achieve gender equality, but evidence in achieving that goal is mixed, with a negligible impact so far in the UK [4]. It seems that the companies that maximise the value of GPG reporting are those that treat it as more than a tick-box exercise and use it to help drive gender equality action, though it would appear not enough are doing so.

Why is reporting a challenge?

Not all countries have regulated GPG reporting. But where this does exist, the requirements differ, such as the minimum number of employees required for reporting to apply. This threshold is often applied at legal entity level, so for a multinational company with multiple legal entities, meeting its legal obligations might require it to produce a handful of reports but these might not cover all its employees.

Types of pay equity measure confuse things too. Some companies only report equal pay ratio. Other companies voluntarily report GPG, but only the median or mean average.

This can make gathering the true GPG for one company a challenge but makes aggregating a fund level average almost impossible.

An example

Looking at our Global Sustainable Equity Fund for 2022, two data providers give us different values of 10% or 11.9% (not that different), with approximately 30% of the fund (by value) covered. Conducting our own research, we generated a similar GPG of 12.1%. Pretty close, but these are already three different values for the same set of companies. Our own research increased coverage to 60%, but this mostly represents UK reporting (plus a small number of companies who provide a total global workforce GPG). The result? At best, only 8% of all the people employed by companies in the fund are covered by this value – that’s under 350,000 people of a total well over 4.3m. Hardly representative.

The story is the same with our Global Sustainable Credit Fund. The GPG reported by data providers is either 18.4% and 22.6%, with coverage of 35% and 19% respectively. Our own research increased coverage to 40% and generated a GPG figure of 15.1%, but of 9.7m people employed by companies in the fund, this still only covered 1.75m (18%).

So what needs to happen?

Better disclosure and transparency. As discussed previously CSRD regulations will require more companies to report their GPG. But we have some key asks of companies to get ahead of regulations and will factor these into our engagement activity and research:

  • Is the company already reporting GPG and if so, for which countries of its operations, for what percentage of its employees and what action is it taking to reach 100%?
  • If it is reporting GPG, what insight has the company gained? What actions are being taken and plans put in place to reduce GPGs where they persist?
  • How is the company preparing for upcoming CSRD legislation on GPG disclosure?
  • Viewing GPG as one indicator within the wider context of gender equality, what other indicators does the company use to measure its performance regarding diversity, equality and inclusivity?


Can better, fuller reporting be done?

In one word – yes. A number of companies already show the way in reporting. London Stock Exchange Group, Banco Santander, Cellnex Telecom, HSBC and Standard Chartered are examples of large, complex multinational companies who already report the GPG for all or most of their employees internationally. Some of these also voluntarily report their ethnicity pay gap.






This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.

The Fund is a sub-fund of Royal London Equity Funds ICVC, an open-ended investment company with variable capital with segregated liability between sub-funds, incorporated in England and Wales under registered number IC000807. The Authorised Corporate Director (ACD) is Royal London Unit Trust Managers Limited, authorised and regulated by the Financial Conduct Authority, with firm reference number 144037. For more information on the fund or the risks of investing, please refer to the Prospectus or Key Investor Information Document (KIID), available via the relevant Fund Information page on

The Royal London Global Sustainable Credit Fund is a sub-fund of Royal London Asset Management Funds plc, an open-ended investment company with variable capital and segregated liability between sub-funds. Incorporated with limited liability under the laws of Ireland and authorised by the Central Bank of Ireland as a UCITS Fund. It is a recognised scheme under section 264 of the Financial Services and Markets Act 2000. The Investment Manager is Royal London Asset Management Limited. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available.