UK FTSE boards must improve diversity, says report

At least one non-white director must be on every FTSE 100 board within five years

Every FTSE 100 company board should have at least one non-white director by 2021, and each FTSE 250 board by 2024, recommends a UK government-backed report released today.

The report reveals that of the 1,087 director positions in the FTSE 100, only 8 percent are held by non-white people, of whom 1.5 percent are UK citizens, despite 14 percent of the UK population being from a non-white ethnic group, up from 2 percent in 1971.

Sir John Parker was appointed in 2015 to chair a review of board diversity and determine whether major companies are keeping pace with the UK’s increasingly diverse workforce. ‘The boardrooms of Britain’s leading companies do not reflect the ethnic diversity of either the UK or the stakeholders they seek to engage and represent,’ he says.  

The report, Beyond one by ’21, includes several recommendations:

  • Nomination committees of all FTSE 100 and FTSE 250 companies should require their human resources teams or search firms (as applicable) to identify and present qualified non-white people to be considered for board appointment when vacancies occur
  • The relevant principles of the standard voluntary code of conduct for executive search firms, in the context of gender-based recruitment, should be extended to apply to the recruitment of minority ethnic candidates as board directors of FTSE 100 and FTSE 250 companies
  • FTSE 100 and FTSE 250 companies should develop mechanisms to identify, develop and promote people of color within their organizations to build a pipeline of board-capable candidates, and their managerial and executive ranks [should] appropriately reflect the importance of diversity to their organization
  • Companies that do not meet board composition recommendations by the relevant date should disclose in their annual report why they have not been able to achieve compliance.

‘This is not an exercise of tokenism,’ adds Sir John. ‘The recommendations are underpinned by strong industrial logic and the need for UK companies to be competitive in the increasingly challenging global marketplace.’

A consultation on the report begins today and the final recommendations will be published in 2017.

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