Greater transparency needed on ethnic diversity of boards, says investment industry
Investment managers are calling for greater transparency on ethnic diversity on boards as almost three-quarters of FTSE 100 companies failed to report the ethnic make-up of their boards at their AGMs.
Investors have previously asked companies to include information on the ethnic make-up of their boards, alongside gender diversity, in their annual reports.
The Investment Association analysed data from the 93 FTSE 100 companies that held their AGMs by the end of September.
FTSE 100 boards are expected to have at least one director from an ethnic minority background by 2021 under the Government-sponsored Parker Review.
Investors are increasingly expecting companies not just to state whether they meet the Parker Review targets but to disclose the percentage of the board that comes from an ethnic minority background.
Chris Cummings, chief executive of the Investment Association, says “transparency is key” to making progress on ethnic diversity on boards of UK companies.
“FTSE 100 firms are falling far short of investors’ expectations when it comes to reporting the ethnic diversity of their boards. The Parker Review from earlier this year showed there is still significant progress to be made on improving the ethnic diversity of UK PLC boards and investors need more information to assess a company’s journey to meeting the Parker Review target,” states Cummings.
Progress has been made on gender diversity, with women now making up more than a third of all board members on FTSE 350 companies, meeting the target set by the Hampton-Alexander Review.
Cumming adds: “We’ve seen good progress on gender diversity when companies have held up the mirror to themselves and listened to investors’ concerns. Companies now need to take urgent action and report on ethnic diversity on their boards. Those who fail to do so will find themselves under investors’ spotlight.”