FCA aims to boost diversity on boards

The Financial Conduct Authority is proposing changes to its disclosure and transparency rules to require listed companies to boost diversity on boards.

Although it is not imposing diversity quotas, the FCA aims to provide “a positive benchmark” for employers to report against and make diversity issues more transparent.

While some companies already voluntarily report on a range of diversity issues, many don’t and the FCA wants to improve consistency among leading companies.

The FCA has mooted benchmarks of at least 40% for female board representation, with at least one of the senior board positions – chair, Chief Executive, Chief Financial Officer or senior independent director – being a woman and at least one member of the board being from an ethnic minority background. The FCA also wants to ensure that broader aspects of diversity are considered, such as sexual orientation, disability and socio-economic background.

Clare Cole, Director of Market Oversight at the FCA, said: “Our proposals are intended to increase transparency by establishing better, comparable information on the diversity of companies’ boards and executive committees. This will provide better data for companies and investors to assess progress in these areas and make investment decisions, reduce investor search costs, and inform shareholder engagement, enhancing market integrity.

“Over time, we expect enhanced transparency may strengthen incentives for companies towards greater diversity on their boards and encourage a more strategic approach to diversity in their pipeline of talent. This may have broader benefits in terms of the quality of corporate governance and company performance in due course.”

The FCA is consulting for 12 weeks on the proposals, with a closing date of 22 October 2021.

Meanwhile, the City of London Corporation has urged financial and professional services firms to encourage their networks and employees to support its socio-economic diversity task force. Speaking at a virtual meeting of representatives from the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England, City Corporation policy chair Catherine McGuinness said: “There is real momentum for change, and I hope that we can seize this through the work of the taskforce, through our industry consultation, the development of a peer network, and our productivity analysis, to build that all-important business case.”

In other news, Amanda Pritchard is to become the first female chief executive of the NHS in England. Pritchard, who has worked as NHS England’s chief operating officer under outgoing boss Sir Simon Stevens, has held a number of key roles across the health service, including running London Guy’s and St Thomas’ NHS Foundation Trust and as chief executive of NHS Improvement. Pritchard has pledged to ensure diversity and inclusion are at the “core” of the NHS.

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