Around 90% of FTSE 100 companies met the Parker Review’s ‘One before 2021’ target to improve ethnic diversity of FTSE 100 boards, according to the latest findings.
The Parker Review committee has published the results of its latest voluntary census on the ethnic diversity of FTSE 100 and FTSE 250 companies’ boards, carried out jointly with the Department of Business, Energy & Industrial Strategy (BEIS). The voluntary census showed that 89 FTSE 100 companies and 128 FTSE 250 companies had minority ethnic representation on their company boards as of 31 December 2021; the target date.
Another five FTSE 100 appointments have been announced since then; and an additional three companies are at an advanced stage in the recruitment process. Of the three companies have not signalled their commitment; one is being acquired by a US Group and will de-list. Another is a Russian steel and mining company which will shortly be removed from the FTSE 100 index; and the final one is a UK subsidiary of a US based Group.
NEW 2024 DIVERSITY TARGET
In 2017, the Parker Review made a series of recommendations and set a “One by 2021” target for all FTSE 100 boards to have at least one director from a minority ethnic background by December 2021. The Review also set a similar “One by 2024” target for all FTSE 250 boards.
“Our December 2021 target of every FTSE 100 Company having at least one Board director from a minority ethnic background has very nearly been met. FTSE 250 companies also continue to make good progress; with three years to go on their target, over half have people from minority ethnic communities in their boardrooms,” confirmed Sir John Parker, Chair of the Parker Review Committee. “This milestone year showcases the extraordinary sea change within listed companies regarding diversity and inclusion. The progressive leadership in FTSE Boardrooms deserves our congratulations and fulsome praise for their positive response to a range of initiatives over the past decade including this Review. Their success places UK listed companies at the forefront of global governance, gender and ethnic diversity. This will be a winning combination in a competitive world with fast-changing demographics.”
These numbers “compare starkly and very favourably with the position in 2017; when only 51% of FTSE 100 companies had people from minority ethnic communities in their boardrooms”, noted David Tyler, Co-Chair of the Parker Review Committee. “However, companies should not think of the Parker Review targets as ‘one and done’. We hope companies will follow the most diverse of their peer group and expand the scale and depth of initiatives fostering inclusion and diversity right through organisations; to help develop the next generation of talent.”
IMPROVING FUTURE BOARD DIVERSITY
However, as expected, the overwhelming majority of these Board positions are Non-Executive Directors; given that FTSE companies generally only have two Executive Director positions; CEO and CFO. Progress continues in these key Executive roles but at a relatively slow pace. Only six CEOs across the FTSE 100 come from a minority ethnic background; and 16 minority ethnic CEOs lead FTSE 250 companies. There are even fewer Chairs from a minority ethnic background; three in the FTSE 100 and five in the FTSE 250.
This increase in board diversity mirrors the results of The Chartered Governance Institute for England and Ireland (CGIUKI)’s survey of FTSE 350 companies; published last November. “Our Bellwether survey of the FTSE 350 showed that 55% of respondents consider their boards to be ethnically diverse. This was substantial progress on our December 2019 report when just 29% of respondents considered their boards diverse; demonstrating the pace of change.
Peter Swabey, CGIUKI ‘s FCG Policy & Research Director. “This is very positive news and sets the standard for FTSE 250 Boards to match this success by 2024. “However, as we have said with gender diversity, the central issue remains in the executive pipeline; and it is disappointing to see so few executive directors from ethnic minorities. Companies should develop a diverse pipeline of board-ready candidates and include these individuals in future succession planning. They should also seek to enhance transparency and disclosure of their records and track progress against their diversity objectives.”
PARKER REVIEW RECOMMENDATIONS
The Parker Review also recommends that continued attention is focused on this issue and believes that this – together with the growing experience of many recently appointed minority ethnic Non-Executive Directors – will help generate growth in the number of minority ethnic directors in the most influential roles around the Boardroom table. This is what has happened with women directors in recent years; and it anticipates a similar trend with minority ethnic directors.
“While there is still more to do, the findings demonstrate the great strides being made; particularly at FTSE 100 level – to increase ethnic diversity on boards as more of Britain’s biggest companies recognise the business case for diversifying their teams so that they better reflect the society we live in,” commented the Rt Hon Kwasi Kwarteng MP, Secretary of State for Business, Energy & Industrial Strategy. “We want to foster a business environment in the UK where people have equal opportunity to succeed and progress in their career through merit and ability; rather than their ethnic background.”
Adding to his comments Arun Batra, EY Partner, CEO of the National Equality Standard and adviser to the Parker Review said: “I’m proud of the fantastic progress we’ve made in the FTSE 100; and all this despite the impact of Covid-19 on recruitment processes. Now, our attention focuses on the FTSE 250, who should prioritise diversifying their boards before the 2024 deadline. Your actions will be critical for both business; and the wider society in our ambition to create a more inclusive and prosperous world.”
INCREASED FOCUS ON DIVERSITY
All FTSE 100 companies responded to the voluntary census; demonstrating the increased attention now being paid to diversity, equity and inclusion in British business. And 233 FTSE 250 companies responded, which is a significant improvement from the last time they were surveyed.
The Steering Group was established in 2015/16 and has been led by Sir John Parker during this period. Now that the first major milestone has passed, Sir John Parker has decided that it is an appropriate time for David Tyler, Co-Chair of the Committee, to assume the lead Chair role for the remainder of the Review. “We are very grateful to Sir John for his inspired and purposeful leadership of the Review since it was initiated in 2015,” concluded Tyler.
See the full report here.
Did you know we have to wait until at least 2074 before Fortune 500 board seats held by underrepresented groups reaches the ‘aspirational’ 40% diversity rate. Click here to read more.
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