Citigroup offered investors more than better-than-expected earnings this week: it also announced yesterday (Jan. 15) that it would begin addressing pay gaps between men and women, and between minority employees and non-minorities, in the US, Germany, and the UK.
In a blog post, the bank said its analysis in those three countries was a starting point, and it would continue its reckoning with the issue in every country where it has employees, which number about 220,000 globally. So far, accounting for factors such as job function, level of seniority, and geography, it discovered “women are paid on average 99% of what men are paid and minorities are paid on average 99% of what non-minorities are paid” in the trio of countries investigated.
That 1% gap is much smaller than reported averages nationally in all three countries. In the US, for instance, Pew Research estimates that women earn about 83% of what men earn, while the difference widens for women of color. As Quartz has reported, the World Economic Forum estimates that women in the UK earn 66% of what men take home on a monthly basis. German women, meanwhile, are paid 78% of what men make, according to Financial Times, citing EU data. (It’s the third worst country for pay equity in the EU, behind Estonia and the Czech Republic.) Yet such figures are always greatly reduced, sinking to 1% – 3%, according to American Banker, when companies begin to compare the salaries of employees in the same role with similar experience.
The 1% gap Citi says it will eliminate makes it the first US bank to bow to shareholder pressure to address this thorny issue. Last year, activist and Citi investor Arjuna Capital submitted a proposal requesting the bank to make this type of change. It withdrew that proposal on Monday, in light of Citi’s announcement.
Citi has not been Arjuna’s only target, according to American Banker. The investor has filed shareholder proposals for American Express, Bank of America, Bank of New York Mellon, JPMorgan Chase, Mastercard, Reinsurance Group of America, Progressive, and Wells Fargo.
Should other banks follow Citi’s lead, women and minorities at Citi and elsewhere might specifically thank Natasha Lamb, a managing partner at Arjuna, for their increased salaries. Lamb has been “systematically” submitting proposals for pay gap inquiries at banks and tech firms, writes Bloomberg’s Claire Suddath in a recent profile. “Her investing philosophy at Arjuna, which calls itself an ‘enlightened’ firm with a $200 million portfolio, is that environmental sustainability and social equality lead to long-term profitability,” she adds.
Lamb wants all of Arjuna’s targeted banks to publicize and correct unfair pay practices. For banks in the UK, it may be a moot point come April, when a new law goes into effect requiring all employers with more than 250 employees to publicly share it pay and gender figures.