Originally, the reputation of banks, or image, came through portraits of clean-shaven bankers. Through the use of portraiture, early banks attempted to solidify their identity and add to the bankers social standing, as well as signal the organization’s reputation for high culture, prestige, and professionalism to those who viewed these artwork . Today, in a rapidly digitalizing world with online banking and blockchain, trust is possibly even more essential to consumers. The 2019 UN Global Compact study on sustainability states that 76% of CEOs claim that citizens’ trust will be critical to business competitiveness in their industry in the next five years.
Generally speaking, diversity instills trust. Moreover, companies with diverse boards receive higher scores on ESG performance metrics more often than those with non-diverse boards (see also Box 1. ESG performance and diversity on boards). Could diversity help solve the trust crisis in the banking sector? At first glance, gender diversity in banks seems quite balanced. According to the RobecoSAM Sustainability Yearbook 2019, insurance companies and banks have slightly more female workers than male, while diversified financials, which includes asset managers and investment banks, has slightly less (under 44%). But what if we only look at the top, specifically at the boards, and what about bankers with beards?
Box 1. ESG performance and diversity on boards 
Looking at three separate ISS-oekom scoring metrics: general combined ESG Score, Environmental Score, and Social Score. ISS-oekom’s ESG methodology scores companies based on 700 factors, and assigns grades ranging from “A+,” being the best, to “D-,” being the worst. The factors cover a variety of areas including: Corporate Governance and Business Ethics; Society and Product Responsibility; Environmental Management; Products and Services; and Eco-efficiency. The methodology does not include board gender diversity, so the results are not skewed in favor of diverse boards. The Social Score contains a factor that measures gender parity in executive management, which is independent of board diversity.
Companies with gender-diverse boards generally have higher ESG scores, indicating that companies with diverse boards adopt better sustainability practices. As seen on the graph above, the peak of the distribution for companies with diverse boards is at “D+,” while the peak of the distribution for companies with fewer women on the board is at “D.” A comparison across the grade spectrum shows that companies with diverse boards constituted the majority of firms with higher scores, while companies with less diverse boards constituted the majority of firms with lower scores.
Data source: ISS Corporate Solutions
When researching at board level the 24 banks from the collective gold, silver and bronze classes in the RobecoSAM Sustainability Yearbook 2018, a less equalized picture appears. Analyzing the current day portraits from their annual reports, shows that bankers with beards are a minute minority. From the 24 banks researched, 309 portrayed board members appeared from either the supervisory board or board of directors. In total only 4.5% of them were bearded and just a meagre 28.8% was female, signaling a largely different picture at the top than at the bottom .
So why is this relevant? The recent McKinsey Quarterly article “Five ways that ESG creates value”, proposes that ESG links to cash flow in five important ways: (1) facilitating top-line growth, (2) reducing costs, (3) minimizing regulatory and legal interventions, (4) increasing employee productivity, and (5) optimizing investment and capital expenditures. Regarding the third category, the article illustrates that a strong ESG performance might lead to reduced regulatory and legal interventions. On top the provided research data indicates that potential state intervention is utterly important to the banking sector. In banking an estimated 50 to 60 percent of corporate profits are at stake due to provisions on capital requirements, banks are “too big to fail,” and the importance of consumer protection.
In short, the takeaway for the financial sector is simple: building trust in the modern digital age is as important as it was in the days of the pilgrims and increasing diversity at the top of the organisation is a great starting point to do just that.
For over 15 years, Finch & Beak has assisted companies in accelerating sustainability by improving and leveraging the results from ESG benchmarks and ratings. If you are interested in learning more about how to improve the ESG performance of your company, contact Jan van der Kaaij, Managing Partner at email@example.com or call +34 6 82 04 83 01.
 Barnes, V., and Newton, L. (2017). Constructing Corporate Identity before the Corporation: Fashioning the Face of the First English Joint Stock Banking Companies through Portraiture. Enterprise & Society,18(3), 678-720. doi:10.1017/eso.2016.9
 Banahan, C., and Hasson, G. (2018), Across the Board Improvements: Gender Diversity and ESG Performance, Harvard Law School Forum on Corporate Governance and Financial Regulation
 Desk research on gold, silver and bronze class banks featured in the RobecoSAM Sustainability Yearbook 2018: Anneroos van der Kaaij