What do you think of when you see the letters EDI? Just another acronym requiring a box to tick?

As a professional pension trustee and chair of trustee boards, it is something that has become increasingly commonplace and is discussed more and more frequently when it comes to who is on a trustee board.

It affects not just the makeup and constitution of the board but also how efficiently it operates. And at a time when the focus on pension scheme governance has never been greater, it is certainly something I have been thinking hard about.

When I think of equality, I would like to believe that I treat everyone fairly regardless of their personal characteristics. But what are those characteristics? Sure, there are the visible ones that we are all familiar with – age, gender, and race, but what about everything else that contributes to who we are?

Those personal characteristics like our upbringing, schooling, and life experiences? Ensuring we have a diverse group of people on our trustee board doesn’t just mean having a mix of men and women, young and old, with different skin colours. We are all unique in so many ways.

Achieving a More Diverse Trustee Board

So, how might you achieve a more diverse trustee board? By finding out a bit more about the board you currently have, understanding their strengths, and what experiences they bring to the table, you will at least be able to identify any gaps and what characteristics you might be missing.

Scientific evidence shows that diversity results in better challenge, better decisions, and ultimately better results. A lack of diversity can lead to groupthink where you are less likely to make optimal decisions.

Incorporating EDI into Your Scheme Governance Framework

How can you incorporate EDI into your scheme governance framework? For an existing board with no vacancies, you might take stock of what gaps you currently have and aspire to fill some of these when the next vacancy arises. If you do have vacancies on your board, now is the time to assess what gaps you need to fill and include these in your EDI policy, while recognising it may not always be possible to meet your aspirations. Looking to fill a trustee vacancy can be challenging – to get anyone, never mind trying to find that one person to meet your diversity criteria.

The best you can do is to be aware of what gaps you are trying to fill and to recognise the limitations of the pool of candidates who are eligible. If most of your members are of one gender in a small firm, then you’re unlikely to get a trustee of the opposite gender applying to join your board.

Conversations and Encouragement

A conversation with the company may help. For an employer-nominated trustee, it can be helpful to have that conversation about what you are looking for, e.g., which part of the business isn’t represented, to give balance to the board.

What else can we do to encourage potential trustees to come forward? In terms of making the role accessible to as many people as possible, at a recent event to discuss imposter phenomenon, people shared personal stories that had affected the way they think and go about their daily lives.

Recognising personal limitations people can put on themselves and improving accessibility by identifying and then removing barriers that we may not have previously been aware of can help find the right person for your board.

A simple way to do this is to refresh your Member Nominated Trustees notice and process.

If you can make it read more like a party invitation and less like signing up to an onerous commitment with the threat of criminal penalties if you get it wrong, then you might get a higher response rate.

Beyond that, put in place a trustee support system. Check in with a regular analysis of training needs and follow up with bite-sized training modules to help them fulfill their duties and reduce any barriers they may feel they have.

Sole Trustees and Wider Industry

For sole trustees, having a diverse trustee board is just as important. For a professional sole trustee, the governance policy and approach to EDI reflects the culture of the professional trustee firm, and the diversity comes with the experience of the wider group of professional trustees.

This doesn’t apply only to trustee boards, of course. Looking to advisors in the wider pensions industry, there is certainly a desire from trustees and sponsors to experience greater diversity and for those firms to demonstrate how they achieve this. Again, not all differences are visible.

Equality, diversity, and inclusion are not just buzzwords or boxes to tick; they are essential components of a well-functioning trustee board. By understanding and embracing the diverse characteristics that each individual brings to the table, trustee boards can make better decisions and achieve better results.

It requires ongoing effort, open conversations, and a willingness to recognise and address the limitations and barriers that exist. But the effort is well worth it for the benefits it brings to the governance and success of pension schemes.

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