Prime Minister David Cameron has written to companies who have not yet complied with Lord Davies review on boardroom diversity urging them to publish their own targets.
The move comes as the Prime Minister hosted a reception for women in business following the six-month review of the Davies report on boardroom diversity.
The six-month report of the Lord Davies review, published by Cranfield School of Management, shows that only 14.2% of FTSE 100 board members and just 8.9% of FTSE 250 firm board members are women. Only 22 of the FTSE 100 firms and just 17 of the FTSE 250 companies have set targets for improving the number of women on boards.
Lord Davies’ report, published in February, said UK listed companies in the FTSE 100 should aim for a minimum of 25% female board representation by 2015, but fell short of imposing mandatory quotas. Earlier in the week the Financial Reporting Council amended the UK Corporate Governance code so that all listed companies will in future report on their diversity policy and on progress towards any measurable objectives they choose to set.
The Government says it will publish all targets online imminently. The Prime Minister reiterated that he was against compulsory quotas being set and said progress had been made – 22.5% of all new FTSE 100 board appointments and 18% of FTSE 250 appointments have been women since the Lord Davies review was published. The number of all male boards has also shrunk from 21 to 14 within FTSE 100 companies and from 52.4% to 47.6% for FTSE 250 companies.
Professor Susan Vinnicombe, co-author of the Cranfield report, said: “Our review reveals that the number of women in board positions is beginning to creep up albeit quite slowly. There are however some very encouraging signs. Fourteen out of the 21 FTSE 100 new appointees (67%) and 20 out of the 28 FTSE 250 new appointees (72%) had no prior FTSE 100 or FTSE 250 board experience. This suggests the appointment process is beginning to open up to new women. This is very positive and indicates that some Chairmen and search consultancies are following Lord Davies’ recommendations to broaden the talent pool.”
Helen Wells, director of Opportunity Now, the gender campaign from Business in the Community, says: “Opportunity Now supports the recommendations of the Lord Davies report. The move towards setting aspirational goals for the number of women on corporate boards is gathering pace. Those FTSE 100 and FSE 250 companies who have not yet published their goals should do so, or risk being left behind in the race for talent.
“Increasing diversity in the board room should be seen as a strategy that delivers commercial advantage. It encourages new ideas and vigorous challenge, helping boards to approach risk in a more robust manner. And it allows boards to escape the herd mentality of group-think. We desperately need all these strengths if we are to recover our global competitiveness. Numerous studies in both the US and Europe have found that companies with the highest proportion of women in their top management teams experience significantly higher returns on equity and total return to shareholders than those with the lowest.”
“A study in Canada showed that boards with two or more women consistently surpassed all-male boards on accountability practices, review of non-financial performance and assuming responsibilities recommended by the Stock Exchange. Companies must make their own plans on how to increase the number of women on their boards based on their own starting points and anticipated board turnover. A company with an all male board could plan to have two women by 2015, a company with a board that is currently a quarter women must aim higher.”