Diversity in the annual report

The topic of “diversity” is playing an ever greater role in corporate management and is also increasingly being addressed in financial communications.

This study examines how DAX 40 companies deal with diversity aspects in their annual reports, which dimensions are mentioned and to what extent key figures on these dimensions are also communicated.

By Simona Gulich, Tammo Heinemann, Emma Starke, Franziska Wehr, Leonie Weiß and Christian P. Hoffmann.

Key findings

  • Gender, age and ethnic origin in the focus of DAX 40 diversity reporting:
    The analysis of the annual reports of DAX 40 companies shows an unbalanced pattern with regard to the thematization of the different diversity dimensions. The dimension of gender and gender identity is mentioned with above-average frequency. The relatively strong emphasis on the dimensions of age and ethnic origin is also striking. This also applies to the frequency with which specific key figures are mentioned, as well as with regard to the diversity of the key figures reported here. The results make it clear that the dimensions of age, gender and gender identity as well as ethnic origin can be operationalized in a variety of ways. This is where there is the most experience in practice. However, simple measurability can lead to blind spots in management: Dimensions that are easy to measure can be overemphasized, while others are underemphasized, as the results show.
  • Neglect of other diversity dimensions:
    Dimensions such as physical and mental abilities, social background or sexual orientation, are noticeably less highlighted. This imbalance in attention is also reflected in the formulation of concrete key figures for these dimensions. There is a gap between theory and practice here, as all diversity dimensions are usually described as equally important in theory. It is also particularly striking that no key figures are given for the religion and belief dimension. This could be due to a lack of empirical knowledge about this dimension, whereby the difficulty of measuring it also plays a role.
  • Past orientation in the formulation of diversity indicators:
    The study shows the key figures for past financial years, while only a few target and/or numerical values for future financial years can be identified. It is possible that fears of perceived missed results are preventing companies from formulating concrete target values. For some diversity dimensions, however, companies may also find it difficult to determine meaningful target values. Here, the reported key figures do not actually have the character of targets.
  • Differentiated diversity management and the need for a balanced strategy:
    In summary, the results illustrate that the established practice of diversity reporting shows certain imbalances – with a strong focus on a few dimensions (in the frequency and quantification of the dimensions as well as with regard to the transparency of target values). In contrast, the relevant literature recommends a holistic and balanced diversity strategy to ensure that all relevant dimensions are adequately taken into account. It remains open to what extent and in which cases the definition of target values is necessary or useful. It is important not to allow the focus of diversity management to be determined by opportunities in the measurability of diversity dimensions.