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Report published into the ethnic diversity of UK Boards

  • Corporate Governance  Image

15 Nov 2016

A report has been published by Sir John Parker that considers the ethnic diversity of UK Boards (“the report”). The findings of the report have been published “for the purpose of consultation, and debate amongst business leaders, regulators and lawmakers”.

In 2015, the government supported a review by Sir John Parker into the ethnic and cultural diversity of UK Boards.  At that time significant attention had only been focused on gender diversity led by Lord Davies in his 2011 review of Women on Boards (link to BIS website).

The report highlights: 

As a general matter, the Boardroom of Britain’s leading public companies do not reflect the ethnic diversity of either the UK or the stakeholders that they seek to engage and represent.  The ethnic minority representation in the Boardrooms across the FTSE 100 is disproportionately low, especially when looking at the number of UK citizens of colour.  

The report therefore calls for changes in Boardroom composition and “highlights clear business reasons for increasing ethnic diversity on UK Boards”.  It sets out both internal and external benefits for increasing ethnic diversity on UK Boards.  These changes, the report indicates, are necessary “in order for corporate Britain to reflect the progress that is being made in diversity, equality and inclusion generally”.

Key findings from the FTSE 100 include:

  • UK citizens of colour represent only about 1.5% of the total director population - in contrast approximately 14% of the overall UK population is a person of colour.
  • 53 out of the FTSE 100 companies do not have any directors of colour.
  • Only nine people of colour hold the position of Chair or CEO.

A number of recommendations, which are published for consultation, are made in the report including:

  • Each FTSE 100 Board should have at least one director of colour by 2021; and each FTSE 250 Board should have at least one director of colour by 2024.
  • Nomination Committees of all FTSE 100 and FTSE 250 companies should require their human resource teams or search firms to identify and present qualified people of colour to be considered for Board appointment when vacancies occur.
  • The principles of the “Standard Voluntary Code of Conduct” for executive search firms should be extended to apply to recruitment of minority ethnic candidates as Board directors of FTSE 100 and FTSE 250 companies.
  • There should be mechanisms within FTSE 100 and FTSE 250 companies to enable them to identify, develop and promote people of colour from within their organisations and create a pipeline of Board capable candidates over time.
  • The company’s annual report should include a description of the Board’s policy on diversity including a description of the company’s efforts to increase ethnic diversity within its organisation including at Board level.
  • There should be a disclosure in the annual report as to why companies have not been able to comply with Board composition recommendations.

In order to reach an ethnically diverse mix similar to the overall adult working population by 2021 (approximately 15%) the report highlights that one in five new Board appointments would need to be a person of colour. 

The report includes two appendices – A Questions for Directors and B The Directors’ Resource Toolkit to help UK companies enhance the ethnic diversity of their Boards and to help existing Boards to deliver on the report recommendations. 

The consultation period runs until 28 February 2017.  A report will then be published containing final recommendations. 

The press release and report are available on the Department for Business, Energy and Industrial Strategy (BEIS) website.

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