22.08.2024

To what extent should companies implement diversity and equality policies?

The question "Why should business care about human rights?", posed by UN High Commissioner Marie Robinson back in 1998, is still valid today, when companies are expected to actively contribute to solving social problems such as discrimination, inequality and violation of human rights. Even then, Robinson and other human rights advocates urged businesses to integrate ethical standards into their operations, supply chains and interactions with employees, customers and communities.

More than 25 years later, diversity, equity and inclusion policies, known as the acronym DEI (from the English language - Diversity, Equity and Inclusion), reflect the desire of business to stimulate the creation of an inclusive environment that provides equal access to opportunities for all and promotes the development of individuals.

If until now all this had a rather voluntary nature and was applied by companies mainly in their employer practices, then very soon compliance with these principles will become an obligation for businesses beyond the borders of the company. The new regulations in the European Union - Directive (EU) 2022/2464 regarding the reporting of companies in relation to sustainability (Corporate Sustainability Reporting Directive) and Directive (EU) 2024/1760 regarding due care of companies in relation to sustainability (Corporate Sustainability Due Diligence Directive), will for the first time require companies to report their activities in these directions for the entire value chain - suppliers, employees, customers and stakeholders.

Corporate Sustainability Reporting Directive (CSRD)

The directive sets new requirements for companies when reporting on their sustainability efforts and practices. From 2025, in stages, different companies, depending on their size, territory and activity, will be obliged to publish information about their employees and subcontractors according to the new European Standards (European Sustainability Reporting Standards or ESRS). This includes presenting workforce statistics as well as how the different dimensions of diversity in the workplace such as gender, age, inclusion of people with disabilities, etc. are managed. Based on all this, companies must prepare a plan for the integration of DEI practices, accompanied by a description of the processes for their implementation.

Why is transparency and reporting on these issues important? External reporting requirements aim for positive and lasting change in companies – instead of being treated as a peripheral issue, the topics of diversity, equality and inclusion can now find their place in their strategic agenda. Seen as an opportunity rather than a burden, this allows businesses to increase their credibility and integrity with the community. Harvard Business Review study it even shows that disclosing not-so-good results has a positive impact on the company's image and the way the public perceives it, because of the openness and transparency shown.

Corporate Sustainability Due Diligence Directive (CSDDD or CS3D)

The directive focuses on two themes key to sustainability – environmental protection and respect for human rights. In the context of the principles of diversity, equality and inclusion, the directive obliges businesses to identify and limit adverse human rights impacts in their own operations, supply chains and business relationships.

What does this look like in practice? The range of stakeholders involved in the sustainability management and reporting process is expanding, and the social responsibility of companies is taking on completely new dimensions. Starting with employees and ensuring equality in the workplace, we move through suppliers – the largest link in due diligence – to customers and their access to services.

The directive should be introduced into national legislation by 26 July 2026 and will apply in stages to businesses established in and outside the EU, depending on their size, turnover and activity.

The good example from Bulgaria

The topic of diversity, equality and inclusion has long been present in the strategy of one of the major telecoms in Bulgaria - Yettel. Started as various HR programs inside the company, DEI practices are increasingly reaching outside the boundaries of the organization.

Yettel's holistic approach relies on a 360-degree view of the subject - through the perspectives of HR policies, sustainable management and social responsibility, and the telecom's efforts are ahead of the legislation expected in the field. Already with the announcement of its 2022 sustainability strategy, the operator announced its plans to support diversity and began reporting data on its workforce.

Every year since then, Yettel has published a progress report on its strategy goals. In it, it shows the diversity in the work environment, as well as the desire to increase the representation of women in its technology team. With the help of open sessions, training on the topic of unconscious bias and partnerships with various STEM (Science Technology Engineering and Mathematics) organizations and educational institutions, from 31% in 2021, the proportion of women in technology roles increases to 35,5% in 2023. And the long-term ambition of the telecom is for this indicator to reach 40% by 2028.

In addition, Yettel promotes the creation of an open and fair environment throughout the value chain - free of discriminatory behavior and language, by including all people and ensuring equal access to services and different locations (workplace, retail outlets, etc.). The support of diversity, equality and inclusion is based on established principles and rules in daily work and in communication with customers, partners and among colleagues.

Engaging stakeholders on the topics of sustainability and DEI practices is another important priority for the company. That is why Yettel requires all its suppliers to comply with the principles set out in the Supplier Code of Conduct – an important condition for maintaining high standards of social sustainability and business ethics. Even before it is available as an obligation, the company also begins a phased screening and analysis of the impact on human rights among the suppliers it works with.