The following report is a testament to the collective effort of numerous people across Nesta. Since we began our journey, we have endeavoured to embed equity, diversity and inclusion (EDI) through every facet of our organisation. With this in mind, we want to thank all of those who have played a significant role in driving our progress over the last year:

Shruti Venkatesh, Matthew Smith, Carla Hallmark Jones, Chris Norris, Jose Sanchez, Susanne Ollig, Hassan Pesaran, Ella White, Davinia Kiley, Claire Doran, Ella Sandelson, Andy Regan, Louis Stupple-Harris, Simran Motiani, Georgina Roberts, Ann Paul, Simona Capogna, Christiana Markou, Mia Simmons, Elspeth Kirkman, Maja Podrzaj, Sue Mcdonald.

Three years ago, we published an EDI strategy that provided a counterexample to platitudes: we wanted to be both ambitious and accountable. We set ourselves nine measurable EDI goals to address some of the biggest inclusion challenges facing society today within our own organisation.

As we believe that holding ourselves publicly accountable for progress against this strategy is important and a key way of contributing to the wider EDI agenda, we publish our progress and reflections each year in an annual EDI report.

In this latest report, you will find an update on our progress to date, takeaways from our recent strategy review process, and where we are heading next.

When we developed our nine-goal strategy in 2021, we aimed to reflect the most pressing EDI issues we face as a society, and the issues that Nesta has the leverage to change - spanning who we are and what we do.

The nine goals reflect our staff diversity across gender, ethnicity, disability, socioeconomic background (SEB) and sexuality; pay parity among staff; belonging and inclusion within the organisation; our communications; mission impact (through projects, new ventures and investments); use of endowment funding; supply chain; and research.

We still believe that these issues are the most relevant for Nesta, and are some of the most critical EDI challenges to tackle beyond Nesta.

We’ve just completed our first comprehensive EDI strategy review, measuring our progress against the ambitious goals we set. This has shown us what it will take to succeed and we’re committed to embedding these success factors into every aspect of our strategy. Reflecting on what has helped drive our success and what has stood in the way, we believe some of the most important and cross-cutting enablers for advancing EDI at Nesta are:

• Setting clear goals and targets that align closely with our overall strategy and reflect the issues most pertinent societally and to staff.
• Collecting and using good data to make informed and objective decisions around how to drive progress, and whether our efforts are working.
• Partnering with teams and leaders that have accountability over relevant programmes or processes, to integrate EDI (limiting standalone initiatives).
• Building and maintaining wide support from people of all backgrounds and all levels of the organisation.

Where these elements have been firmly in place, we have made meaningful progress over the last three years. We have successfully driven an increase in our staff diversity, for example, by setting clear goals, having a strong approach to data, delivering change in close partnership with the people team – who are equally accountable for our progress, and benefitting from wide senior leadership support.

On the other hand, we have struggled to make as much headway where one or more of these key enablers has not been in place, for example, understanding the distributional impacts of our research and early-stage work on minoritised communities, and seeking to increase supplier diversity. We are therefore making a few changes to sharpen our focus, align our organisation, and bolster our ability to deliver on our EDI ambitions. These changes are discussed in the sections below.

This year, we’ve made strides in some traditionally challenging areas: for the first time, a quarter of our staff come from minoritised ethnic backgrounds. Yet, we recognise that there’s more work ahead — particularly in increasing senior minoritised ethnic representation. We are also exploring ways to strengthen representation and inclusion of people from lower SEBs, having not yet made significant strides forward in this area.

This reduction in the ethnicity pay gap is a direct result of improvements and enhancements to some of our key people processes. We have:

• introduced diversity targets for our interview shortlists
• implemented interventions in our performance management process to ensure equitable treatment for minoritised groups, including reviewing proposed salary increases through an EDI lens at three separate junctures
• involved an ‘inclusion conscience’ in all calibration meetings
• conducted a thorough EDI check and analysis before the final executive meeting.

Our initiatives have delivered positive results. By eliminating barriers in recruitment and performance, we achieved our ethnicity recruitment target a full year ahead of schedule, and now plan to keep pushing this further. Moreover, this year, 39% of promotions were awarded to employees from minoritised ethnic backgrounds – outperforming the percentage of staff from minoritised ethnic backgrounds. Similarly, 56% of pay increases went to women, on par with organisational representation. By fostering equality of opportunity, we’ve made meaningful strides towards greater equality of outcomes.

Our latest staff engagement survey, conducted in September 2023, showed encouraging progress in fostering a sense of belonging, with 64% of staff reporting a positive sense of belonging — an increase of seven points from the previous year. Among Asian colleagues, sense of belonging was even higher – at 75%. We are hopeful for continued improvement in our upcoming engagement survey, scheduled for October.

In parallel, we are updating our approach to EDI learning across Nesta. As the organisation matures, we’re moving beyond basic awareness of inclusion and identity towards embedding inclusive habits in our everyday work. To support this shift, we are piloting new onboarding and learning programmes in October with staff from diverse backgrounds, helping us determine their effectiveness before deciding on broader implementation.

As illustrated in Figure 1, socioeconomic diversity remains an area where further progress is needed. Recent focus groups revealed that while representation is crucial, inclusion is equally vital. Participants, particularly those from lower socioeconomic backgrounds, shared their reluctance to openly discuss these issues, often reflecting on years spent masking their identities in various workplaces in an effort to assimilate — efforts that are not easily undone. To address this, we will introduce questions in our upcoming engagement survey that will allow us to disaggregate the data by socioeconomic background. This will help us develop a targeted action plan, alongside assessing pay gaps and progression rates by socioeconomic background, just as we currently do for gender and ethnicity.

As discussed, this year we underwent a comprehensive review process, to ensure our strategy was still fit for purpose. We still believe that these issues address the most important challenges at Nesta and beyond. They also continue to resonate with staff, and we have built expertise and experience in working on these challenges.

Our recommendation is to recommit to the goals we have set out and, in many cases, to recommit to the targets as well – with a greater focus on some elements within each goal (such as senior leadership diversity) and the intersections between them.

With this in mind, we’re keen to ensure all of our goals meet the above criteria, so we’re making some small changes:

1. Additional targets for senior leadership: We are setting ourselves a sub-target – to achieve at least 25% representation of people from minoritised ethnic and lower socioeconomic backgrounds across Nesta, including at the senior leadership levels. Currently, ethnic representation at our most senior levels is at 13%, and 19% of senior leaders are from a lower SEB. Given lower rates of turnover and greater recruitment challenges for more senior positions, this is a highly stretching ambition that we expect will take years to achieve.
2. Aligning our EDI and strategy processes: We have decided to align our future EDI strategy review with Nesta’s broader three-year strategy review points (2024, 2027 and 2030). This will help support a coherent organisational approach, reinforcing the key enablers set out above. If we are successful in meeting some targets before 2027, we will push ourselves to overachieve on the targets and sub-targets, and double our efforts on areas where we are not delivering as well.
3. Adapting our mission-focused goal: To ensure our EDI goals and Nesta’s wider strategy work in tandem, we are refining our mission-focused goal to be more specific and reflective of how we deliver impact as an organisation. Instead of just ‘considering and measuring the impact of our work on minoritised and disadvantaged groups’, which we have found too vague for how we innovate in practice, we are sharpening our commitment to:

Nesta’s mission work actively contributes to delivering an inclusive transition towards net zero, fairer long-term health outcomes, and equitable early learning for children facing economic disadvantage, and actively mitigates the most important unintended consequences of our work.

Each mission is now spend considering what potential unintended consequences of our work pose the greatest risks to minoritised communities, and how we could mitigate against this. Our sustainable future mission is introducing a new area of focus on fairness, and our healthy life mission is continuing to do economic modelling to ensure our recommendations to introduce mandatory targets for the largest food retailers would not increase the price of food for consumers, for example.

Our revised goals are that by 2027 we will:

• Goal 1: Have eliminated our gender and ethnicity pay gaps and our gender and ethnicity progression gaps, at all levels of the organisation.
• Goal 2: At a minimum, be representative of the UK on the following characteristics: ethnicity, disability, sexual orientation and gender.
• Goal 3: At a minimum, be representative of the UK for staff from more disadvantaged socioeconomic backgrounds.
• Goal 4: Have a culture where everyone feels they belong and are included at Nesta, irrespective of their background.
• Goal 5: 25% of our investees and 50% of our suppliers will be led by people from minoritised and disadvantaged groups.
• Goal 6: The majority of our innovation missions’ endowment funding will be spent on activity to improve the circumstances of people from minoritised and disadvantaged groups, and will not widen inequalities.
• Goal 7: Nesta’s mission work actively contributes to delivering an inclusive transition towards net zero, fairer long-term health outcomes, and equitable early learning for children facing economic disadvantage, and actively mitigates the most important unintended consequences of our work.
• Goal 8: We will be actively using our platforms to raise the voices of minoritised and disadvantaged groups, and contributing to a wider movement for more equitable, diverse and inclusive practices.
• Goal 9: We will take an empirical and creative approach to embedding equity, diversity and inclusion throughout our work. By 2025, we will have generated evidence supporting five ways of working that effectively address issues of discrimination and exclusion.

As discussed above, there are some top priorities within our EDI strategy for the next 12 months, and we will be focusing most of our effort on these areas. This includes:

1. diversity of talent at top levels of the organisation
2. socioeconomic diversity and inclusion
3. inclusive practice in our project lifecycle
4. learning, inclusion and belonging.

Though we will spend most of our time on the four priorities set out above, we do expect to make headway on our other goals as well, like supporting our employee resource groups, adopting and embedding newly developed EDI principles in our new Mission Studio, continuing to ensure diversity across our speakers (when we host or when we speak elsewhere), and publishing more of our insights and learnings externally.

As ever, we’re always keen to learn from other organisations. If you’re interested in learning about anything we’ve covered in this report, please reach out to: [email protected].