November 30, 2022

Board Diversity: More Progress Across the Pond

UK-listed companies are assembling more diverse boards & executive management teams than we are in the US, ahead of new rules from the UK Financial Conduct Authority that will require disclosure in annual reports beginning in April 2023.

In addition to numerical disclosure in a new table about the diversity of the board and executive management, the rules call for “comply or explain” disclosure against diversity targets set by the FCA. Those targets are: that corporate boards be comprised of at least 40% women directors and have at least one director from a non-white minority ethnic background, and that at least one “senior board position” (Chair, CEO, CFO, or Senior Independent Director) be held by a woman.

ISS ESG recently collected data from affected companies about their progress on these requirements. Here’s an excerpt from their blog that summarizes the findings:

ISS ESG Director & Executives Diversity Data collated at the end of April showed that 18 percent of FTSE AllShare constituents (excluding investment trusts) did not yet meet any of these targets and that only 14 percent had met all three.

Six months later and roughly five months ahead of implementation, ISS ESG finds a smaller proportion – 14 percent – of FTSE AllShare constituents were not yet meeting the targets while, conversely, those that met all three had grown by five percentage points to 19 percent.

Moreover, an analysis of data as of November 1 finds that 40 percent of FTSE AllShare constituents had met the target of at least 40 percent of women on the board, 53 percent have at least one senior board position held by a woman and 64 percent have at least one minority director, up eight, five and five percentage points respectively since late April.

Liz Dunshee