Companies that embrace diversity can reap real business benefits, according to a new report.

The report, from trade body the Confederation of British Industry (CBI) and the TUC, found that companies that look beyond race, sex, age, disability, sexual orientation or religion can increase morale, productivity, improve retention rates and lower recruitment costs.

The report is being released tonight by the director-general of the CBI, Richard Lambert; the general secretary of the TUC, Brendan Barber; Trevor Phillips, chair of the Equality & Human Rights Commission; and the minister for women and equality, Harriet Harman.

The report demonstrates how diversity can benefit business through a number of case studies.

Pinsent Masons solicitors’ positive approach to lesbian and gay equality saw its lawyer turnover rate fall from 17% to 12%, a substantial saving when losing a solicitor costs a law firm an average of £110,000.

Transport company Arriva Works sent 5,800 staff on diversity courses, set up 24 learning centres to raise skills and introduced a diversity recruitment programme. Now, Arriva North West & Wales has seen an increase of 60% in female bus drivers and Arriva Yorkshire has seen a third reduction in the number of people leaving within two years of employment.

Recruitment and training provider PPDG stressed local knowledge and commitment. This has resulted in a diverse workforce that understands the needs of different communities and has seen its market share in some areas rise from 50 to 63%, while lower staff turnover has saved the firm money too.

Richard Lambert said: "Employers who take steps to encourage a more diverse workforce notice huge benefits from doing so, whether it is hiring skilled staff, understanding their customers' needs better or more fundamentally through improved morale and productivity.”

Brendan Barber added: “The need to unlock the talents of all – to create a truly representative workforce – is even more crucial at a time of economic uncertainty. The issue is not whether business can afford to diversify, but whether it can afford not to.”