FTSE boards 'do not reflect the ethnic diversity of the UK'

Earlier this month a report into the ethnic diversity of UK boards was published, summarising the findings of a review into the FTSE 100 companies.

• Out of 1,087 director positions, only 8% are held by directors of colour - despite the fact that 14% of the total UK population is from a non-white ethnic group.
• Seven companies account for over one-third of directors of colour in the FTSE 100, while 53 companies do not have any directors of colour at all.
• Only nine people of colour hold the position of Chair or CEO.

"The boardrooms of Britain's leading companies do not reflect the ethnic diversity of either the UK or the stakeholders that they seek to engage and represent. Ethnic minority representation in the Boardrooms across the FTSE 100 and 250 is disproportionately low."

The report made a number of key recommendations:

Increasing the ethnic diversity of UK boards

• Each FTSE 100 board should have at least one director of colour by 2021, and each FTSE 250 board by 2024.
• Nomination committees of all FTSE 100 and 250 companies should require their human resources teams or search firms to identify and present qualified people of colour to be considered for board appointment when vacancies occur.
• The relevant principles of the Standard Voluntary Code of Conduct for executive search firms, in the context of gender-based recruitment, should be extended to apply to the recruitment of minority ethnic candidates as board directors of FTSE 100 and 250 companies.

• FTSE 100 and 250 companies should develop mechanisms to identify, develop and promote people of colour within their organisations to build a pipeline of capable candidates.
• Existing FTSE 100 and 250 board directors should mentor and/or sponsor people of colour within their own companies to prepare themto assume internal senior managerial or executive positions or external non-executive roles.
• Candidates from diverse backgrounds should be encouraged and supported to take on internal board roles as well as board and trustee roles with external organisations.

• A description of the board's policy on diversity should be set out in a company's annual report, and this should include a description of the company's efforts to increase ethnic diversity within its own organisation, including at board level.
• Companies that do not meet board composition recommendations by the relevant date should disclose in their annual report why they have not been able to achieve compliance.

Earlier proposals for statutory quotas for boards and mandated shortlists were both rejected for now but may be revisited depending on future progress on board diversity.

Comments on the report are requested by 28 February 2017. A report with final recommendations will then be published.

This review and report on ethnic diversity is separate from the corporate governance inquiry, launched by the government in September to look at, among other things, gender balance in executive positions.