JEDI regulation database - make this a GS download
Regulation in Different Regions
Below we share disclosure requirements around JEDI investing in a few select regions, and identify their implications for investors, entrepreneurs, fund managers and related intermediaries.
UK
Equality Act 2010: Prohibits discrimination, victimisation and harassment on the grounds of nine protected characteristics (age, disability, race, religion or belief, pregnancy or maternity, marital or civil partnership status, gender reassignment, sexual orientation and sex) and applies both in the context of employment and in the provision of goods and services to a consumer.
Investor Implications: Provides protection for employees against discrimination (age, race, disability, sexual orientation etc) at all stages of the employment lifecycle, ii) gives men and women a right to equal pay for equal work, and iii) part-time workers and fixed-term employees are protected against discrimination.
Equality Act (Gender Pay Gap Information) Regulations 2017 requires employers who employ 250 or more employees on 5 April of each year to publish an annual report on their gender pay gaps. Employers are required to report on their gender pay gap, their bonus pay gap, the proportion of male and female employees that receive bonus pay and the proportion of male and female employees by quartile pay bands.
Investor Implications: Applies to employees; while partners in a firm, including LLP members, are not employees under the Regulations, there has been considerable political pressure to include partner information as part of gender pay gap reporting and in practice many firms have done so.
UK Money Markets Code: The Code was launched in April 2017 and sets out best practice in the unsecured, repo and securities lending markets in the UK. It was written by market participants from across all sectors and is owned by the BoE's Money Markets Committee (MMC).
Investor Implications: Outlines the prominence and benefits of diverse teams, and recent amendments also reflect the response to COVID-19, emphasising acceptance around working from home and the increasing importance of ESG factors generally.
United States
In August 2021, the SEC approved the Nasdaq proposal to amend its listing standards to encourage greater board diversity and to require board diversity disclosures around race and ethnicity for Nasdaq-listed companies, with a “comply or explain” framework in place.
Investor implications:
Increasing disclosure requirements and shifts in the investment industry around diversity reporting, albeit as a first step, is largely focused on gender, race, and ethnicity and not other forms of diversity such as non-binary gender identity, sexual orientation, disability, and other demographic identifiers.
Increasing calls for conducting racial equity audits, ideally using a third party and getting companies to disclose diversity information about their recruiting, retention and promotions.
Companies have had to look outside of the usual channels—other boards and CEOs—to find female board candidates; Russell 3000 Board Diversity Disclosure Initiative asks for the disclosure of the makeup of Russell 3000 companies’ boards of directors – inclusive of gender, race and ethnicity
Equal Employment Opportunity Commission (EEOC) rolled out EEO-1 Reports – whereby private companies with more than 50 employees are required to provide a demographic breakdown of a company’s workforce by race and gender, as part of the effort for increased and more standardized methods for racial and ethnic disclosure.
Investor implications:
The EEOC requires EEO-1 Reports be sent to the Commission, but does not require public disclosure of the reports’ contents. Currently only 25% of US companies have publicly disclosed this data, with an even smaller subset disclosing an annual breakdown of the representation of different ethnic minorities at various levels across the organisation.
Securities and Exchange Commission (SEC) amended Item 101(c) under Regulation S-K, calling on employers to disclose human capital measures or objectives that a company deems material to its business.
Investor implications:
This measure goes a step beyond the previous requirement to only disclose the number of employees. Even with this amendment, the new human capital reporting requirements make no mention of diversity data disclosure.
Office of Minority and Women Inclusion (established in January 2011, is responsible for implementing section 342 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 ), and focuses on increasing the participation of minority- and women-owned businesses and the national banks, federal savings associations, and federal branches and agencies of foreign banks that the Office of the Comptroller of the Currency (OCC) regulates. They have implemented a voluntary diversity self-assessment for regulated entities to use in assessing their diversity policies and practices.
Investor implications
As the OMWI’s diversity self-assessment tool is voluntary,, the submission rates have since been extremely low, with only 4 percent of firms reporting their data as of 2021. To tackle the low response rate, some have suggested the OMWI’s diversity self-assessment be required in annual reports for all entities regulated under the SEC’s purview.
Proposed ESG related reporting signals a more permissive regulatory environment for fiduciaries considering ESG factors when making investment decisions and voting proxies on behalf of US retirement plans and investors subject to ERISA
Investor implications
The Proposed Rule includes five key changes from the earlier 2020 Rule, which has been seen as imposing new hurdles when considering ESG factors in making fiduciary investment decisions for plans:
De facto recognition of ESG as material to investment risk and return
Pecuniary Factors Test is now the Risk-Return Test (and ESG counts)
Tie-Breaker Test redrafted to be broader and easier
QDIAs can use ESG—and no special rules for DC plans
Mostly back to old proxy voting rules
Find more analysis on these points in this article.
The Equal Protection Clause of the U.S. Constitution (Fourteenth Amendment) requires state and federal governments to provide equal protection for its people under the law, meaning state actions regarding a “fundamental right” cannot discriminate on the basis of race, religion, or gender; it is unclear if this also applies to sexual orientation.
Federal law in the US - Title VII of the Civil Rights Act of 1964 - prohibits employers from discriminating against applicants and employees on the basis of race, color, religion, sex, and national origin (including membership in a Native American tribe). It also protects applicants and employees from retaliation for asserting their rights Title VII. The prohibition against disrimination extends to all terms, conditions, and privileges of employment. It also prohibits practices that seem neutral but have a disproportionate impact on a protected group. This law applies to private employers with at least 15 employees, state and federal governments, employment agencies, and labour organisations. Title VII is enforced by the U.S. Equal Employment Opportunity Commission (EEOC). Additional state laws may extend prohibitions against employment discrimination. Other federal anti-discrimination in employment laws include the Equal Pay Act of 1963 (EPA) (illegal to pay different wages to men and women); the Age Discrimination in Employment Act of 1967 (ADEA) (protects people who are 40 or older from discrimination because of age); Title I of the Americans with Disabilities Act of 1990 (ADA)/Rehabilitation Act of 1973 (illegal to discriminate against a qualified person with a disability); and the Genetic Information Nondiscrimination Act of 2008 (GINA) (illegal to discriminate against employees or applicants because of genetic information); and the Immigration Reform and Control Act of 1986 (IRCA) (prohibits discrimination against employees or applicants based on national origin). A full list of US federal anti-discrimination laws, which apply to education, housing, lending, voting, and other realms, is available here.
EU Regulations
EU's Article 8 prohibits the processing of personal data in relation to certain special categories, including data concerning ethnic origin, mainly to prevent discrimination. There are exceptions to this rule that vary in different markets; for example, if a person has given their consent or the data is aggregated
Investor implications
Article 8 has had the effect of preventing the collection of data on ethnic origin, and so such data is not available on the basis of self-identification but instead through proxies (such as migration status and language proficiency.) The resultant lack of statistical data has been pointed to by many as hamstringing measures attempting to counter discrimination on the grounds of ethnic origin, depriving people with an ethnic minority background of the tools needed to challenge discrimination.
In July 2021, the European Commission & the EU Platform on Sustainable Finance published a draft report on extending environmental objectives and considering social taxonomy. The suggested structure of a social taxonomy is both vertical and horizontal. The vertical dimension focuses on products and services for basic human needs and basic infrastructure. The horizontal dimension takes into account impacts on different groups of stakeholders affected by economic activities (workers, consumers and communities).
Investor Implications
According to the Institute for European Environmental Policy, this new taxonomy would create a common language between issuers, investors and policymakers to understand and deliver sustainability through private finance. By applying reporting requirements against technical screening criteria, the new taxonomy would encourage transparency and clarity on the sustainability of investments.
EU Green Finance Package, which includes Sustainable Finance Disclosure Regulation 2019/2088 (SFDR). This seeks to standardise disclosure requirements on how financial market participants (FMPs) and/or financial advisors integrate environmental, social and governance (ESG) factors in their investment decision-making and risk processes.
Investor Implications
The SFDR rules would imply that: i) broadly firms disclose certain info publicly, provide ESG-related pre-contractual disclosures to investors, FMPs and financial advisers that are required to comply with Article 4 (or that elect to do so), and must consider the principle adverse sustainability impacts(PASI) of their investment decisions on sustainability factors. Also, they need to outline how sustainability risks are integrated into the investment process/policies on investment decision making (Article 3) and how the integration is consistent with remuneration policies (Article 5).
On 15 June 2021, the European Central Bank (ECB) launched a consultation on revisions to its guide to fit and proper assessments and a fit and proper questionnaire for members of the management bodies of significant credit institutions under the Single Supervisory Mechanism (SSM).
Investor implications
The ECB consultations and ensuing regulations are trying to "raise the bar, increase transparency and improve the quality and efficiency of fit and proper assessments and processes". They also introduce supervisory expectations on climate-related and environmental risks and explain the ECB's approach to diversity (the ECB has published a blog post on why it is seeking greater diversity in banks).
In the EU, discrimination based on racial and ethnic origin in the fields of employment, social protection, including social security and healthcare; social advantages, education and access to and supply of goods available to the public including housing is prohibited pursuant to the Racial Equality Directive (RED), which was adopted in 2000.
BOXOUT: Focus on Germany:
German law promotes diversity and inclusion by protecting certain categories against discrimination. According to Article 3 of the German Constitution, no person shall be favored or disfavored because of sex, parentage, race, language, homeland and origin, faith, religious or political opinions or disability.
German Remuneration Transparency Act (Entgelt-transparenzgesetz) promotes equal pay for women and men for the same work or work of equal value. According to the Remuneration Transparency Act, each employee is entitled to gain information by the employer in order to verify compliance with the equal pay principle. It has had mixed results
Canada
Under the Canada Business Corporations Act (CBCA) companies now need to disclose information to their shareholders on the diversity of their boards of directors and senior management teams.
Investor implications
This disclosure requirement means that diversity targets need to be publicly outline and disclosed for public corporations, with a "comply or explain why" framing on place
Diverse groups as defined under the Employment Equity Act (which strives to achieve equality in the workplace) includes women, Indigenous peoples (i.e., First Nations, Inuit and Métis), persons with disabilities and members of visible minorities.
Investor implications
The underlying goal of the Employment Equality Act is to correct the conditions of disadvantage in employment experienced by the four named groups (women, indigenous peoples, people with disabilities and members of visible minorities)
Singapore
The Code of Corporate Governance, which applies to all listed companies in Singapore, requires every listed company to have a board diversity policy, including qualitative and measurable quantitative objectives (where appropriate).
Investor implications
The Code and the diversity requirement follows the comply or explain framework
Regarding data collection, the Personal Data Protection Act 2012 (No. 26 of 2012) (PDPA) defines “personal data” and for organisations seeking to collect, use or disclose personal data in relation to diversity matters should ideally collect, use or disclose such data with the consent of the employees to whom such data relates.
The Tripartite Guidelines on Fair Employment Practices provide clear guidelines on how to ensure a Singaporean core workforce, supplemented by foreigners/expatriates. There are also guidelines around hiring, retention, compensation, etc., stating that “[this] will not only help prevent discrimination at the workplace, but also encourage employers to adopt progressive HR practices that will benefit both employers and employees.”
Investor implications
The Tripartite guidelines suggest only asking only questions relevant to assessing an applicant’s suitability for a job should be asked, not anything which could have a discriminatory effect.
Australia
Australia has comprehensive anti-discrimination laws at both the federal and state/territory level.
Data on gender equality and equal pay is gathered by the Workplace Gender Equality Agency (WGEA), part of the Workplace Gender Equality Act 2021
This Act requires private sector employers with 100 or more employees to file an annual report signed by the CEO with the WGEA
Listed public companies are to comply with the ASX Corporate Governance Council requirements including an established diversity policy, measurable objectives for gender and wider diversity, with overall diversity defined as gender, age, ethnicity and cultural background.
Investor implications
A list of non-compliant organisations is shared publicly to ensure transparency and accountability
The underlying areas under the Gender Equality Act cover a wider breadth than previously including workplace overview, action on gender equality, work/life balance and support
Recent research on publicly listed company board diversity in Australia shows progress in increasing the number of female directors, but less on other forms of lived experience around ethnicity, sexual orientation, etc
South Africa
The Employment Equity Act 55 of 1998 places general and specific obligations on employers to eliminate unfair discrimination in any employment policy or practice. Clear beneficiaries of this affirmative action are defined as black people (includes Africans, Coloureds [which refers to individuals with a mixed racial heritage] and Indians), women and people with disabilities.
Investor implications
These laws and regulations and ensuing policies and acts are attempts to continue enhancing equitable economic transformation and address the systematic exclusion of marginalised groups.
Broad-based Black Economic Empowerment (BBBEE) Act 53 of 2003 is a government policy to advance economic transformation, enhance the economic participation of Black people (African, Coloured and Indian people who are South African citizens), who have been historically disadvantaged, in the South African economy and bridge the gap between formal and substantive equality to ensure that all people in South Africa fully enjoy the right to equality.
Investor implications
BBBEE Act is helpful in providing a common approach / framework for measurement , and can support in setting targets around gender and diversity.