Gender pay gap in sustainability reporting
Regulatory requirements and current implementation in the financial sector
The gender pay gap is the average difference in gross hourly earnings between men and women. In recent years, it developed as a key indicator for assessing gender equality in companies and is now an essential component of sustainability reporting. It enables investors to integrate negative impacts and social risks in their investment process. For calculating the gender pay gap, companies are faced with new requirements around data availability, system integration and internal processes.
Gender Pay Gap Study (in German language)
The role of the gender pay gap in sustainability reporting
Under the Sustainable Finance Disclosure Regulation (SFDR) financial market participants with more than 500 employees shall disclose how they take adverse impacts (PAIs) into account – including the gender pay gap across all investments (Annex I, Table 1, Indicator 12). Under the CSRD CSRD, disclosure requirement S1-16 of the European Sustainability Reporting Standards (ESRS) requires companies to disclose the unadjusted gender pay gap if it has previously been identified as material in the double materiality analysis.
The new EU Pay Transparency Directive requires all companies with more than 100 employees to disclose pay transparency indicators, including the gender pay gap. Unlike SFDR or ESRS S1-16, which only require the consolidated value of the unadjusted gender pay gap, the EU PTD requires the disclosure of several remuneration indicators.
Measuring the gender pay gap requires the consolidation of salary data from various sources, the harmonisation of employment types and working time models, and the classification of employees by gender. The valuation of non-monetary benefits into monetary values is particularly challenging.
Study on the gender pay gap
This study analyses the reported gender pay gaps of the first generation of sustainability reports (CSRD/ESRS). It includes 68 reports from the financial sector that reported at least in accordance with the ESRS and disclosed the unadjusted gender pay gap. The objective of our study is to provide insights into the current implementation practices and challenges around the GPG. In addition, the study examines potential drivers of the GPG.
Download our study here using our download form.
Dr. Lars Hinrichs, LL.M. (Univ. Stockholm)
