ABI in diversity warning

Sep 29, 2011
<p>Association of British Insurers says companies need to show they are focused on improving female board representation</p>

UK investors have called on companies to improve the level of disclosure they make about board diversity.

The demand appears in a report on board effectiveness released this week by the Association of British Insurers (ABI), whose members control roughly one quarter of the UK’s stock market capitalization.

In the report, the ABI says only 19.2 percent of FTSE 100 companies ‘provide a meaningful statement on board diversity’.

Examples of meaningful disclosure include descriptions of how diversity is encouraged throughout the business, and setting targets for the number of women on the board, notes the ABI. The association says steps such as these should be disclosed through the annual report.

‘Over time these plans should help to bring more women through the executive ranks and therefore increase the pool available for non-executive recruitment,’ states the report.

Davies report

The ABI’s warning follows Lord Davies’ report on women on boards, which in February this year called for more representation but rejected imposing quotas on companies as a solution.

‘Group think’ among boards has been blamed as one of the contributors to the banking crisis in the UK.

In the ABI report, the association also calls on companies to improve their disclosure around succession planning and board evaluation.

In addition, the ABI this week released revised principles on remuneration to help companies craft incentive schemes that will meet shareholder approval. The principles were last revised in 2006.

‘The board effectiveness report and long-standing remuneration guidelines represent UK best practice,’ comments Otto Thoresen, director general of the ABI, in a statement.

‘They aim to ensure remuneration is linked to performance and shareholders’ interests are protected.’

Click here to download the ABI’s report on board effectiveness. Click here to read the revised principles of effective remuneration.

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