The 2020 Parker Review published yesterday has revealed that FTSE boards will miss the government-backed target of having at least one board director of an ethnic minority background by 2021. The latest review, published by Sir John Parker, EY and the Department of Business, Energy & Industrial Strategy (BEIS), reveals that 37% of FTSE 100 companies (31 out of 83) surveyed still do not have any ethnic minority representation on their boards.
In the first 2017 Parker Review report, commissioned to consult on the ethnic diversity of UK boards, over 50% of FTSE 100 boards (51 out of 100 companies) had no ethnic representation on their boards. So it made a series of recommendations and set a target for all FTSE 100 boards to have at least one director from an ethnic minority background by 2021. Although the latest data reveals that 11 additional FTSE 100 companies now have an ethnic minority director on their board since 2017, the pace of progress has been slower than hoped, and unlikely to hit the ‘One by 2021’ target recommended by the Review in 2017.
ETHNIC DIVERSITY FOCUS
“Although progress has been made to increase the representation of ethnic minorities on FTSE boards in the UK, there is still much more work to be done to reap the undeniable benefits that diverse leadership provides. Ethnic diversity needs to be given the same level of board room focus that finally led to increasing female representation on boards, which has seen real progress in recent years,” stated Sir John Parker, Chairman of the Parker Review Committee.
“To remain competitive in the global market, UK businesses must focus further on the recommendations in the report, increasing alignment of the Board with its customer base at home and overseas. They must also address the key challenges of recruiting board talent now and in the future, recognising the significant demographic changes taking place in the UK and international markets in favour of ethnically diverse candidates. Action is needed to bring about long-term change,” he added.
STARK STATISTICS
In fact, the 2020 Parker Review reveals that the FTSE 250 boards are even less diverse than the FTSE 100. Approximately 69% of the FTSE 250 companies analysed (119 out of 173 companies) still have no ethnic diversity on their boards. Across the FTSE 350, 59% have no ethnic representation on their company boards (150 out of 256 companies).
Looking at specific leadership roles across the companies surveyed for this year’s report, just six ethnic minority directors hold the position of Chair or CEO in the FTSE 100, nine in the FTSE 250 and 15 in the FTSE 350. Of the ethnic minority directors in the FTSE 350 companies who engaged in the survey, 43% are women. Furthermore, just 41% of BAME directors in the FTSE 100 are female, compared to 45% in the FTSE 250.
DIVERSITY MEASURES
Commenting on the latest published results, Arun Batra, EY Partner, CEO of the National Equality Standard and adviser to the Parker Review, said: “We recognise that meaningful change takes times, but the data tells us that the current pace of change is not quick enough to meet the targets set by the Review.
“Businesses need to continue to challenge traditional ways of working and legacy issues, and really investigate the talent that they have available in their business. While there isn’t a one size fits all approach, there are certainly a number of initiatives we’ve seen that make a difference in some companies. The recommendations in the review include setting diversity targets, disclosing diversity metrics and progress, and identifying targeted programmes and initiatives that can help high-performing BME individuals reach board level.”
ACCELERATING PROGRESS
Adding to his comments, the Rt Hon Andrea Leadsom MP, Secretary of State for Business, Energy & Industrial Strategy, commented: “I want the UK to be the best place in the world to work and to grow a business. Research consistently shows that diversity in businesses is not only essential for good working practice but makes them more successful. This Government backs business and wants it to succeed in becoming more diverse. But as this report shows, firms have much more to do.”
To help accelerate the rate of progress, the 2020 Parker Review sets out additional recommendations, whilst maintaining those set out in the 2017 report. It also contains a detailed and broad-ranging toolkit for companies and those responsible for recruitment, to help implement many of the recommendations.
The new recommendations focus on measuring board level diversity and helping to build a pipeline of board-ready candidates. They include:
- Engage – FTSE 350 companies must engage constructively on this issue and report on the ethnic diversity of their boards. The Review found that a small number of companies did not respond to their request for data.
- Report – The Review urges companies to report fully on their ethnic diversity policies and activities as part of their reporting requirements and in compliance with the Corporate Governance Code. Ideally this should also be with the aim of delivering the recommendations in the Parker Review and should cover board appointment processes and the work of the nomination committee.
- Recruit – Executive recruiters should be much more proactive in ‘marketing’ highly talented ethnic minority candidates and in applying their voluntary code of conduct. Recruiters have already supported the Hampton-Alexander Review’s aim to increase female board representation. The Parker Review recommends an extension to this initiative to cover ethnic diversity.
- Develop – A pool of high potential, ethnic minority leaders and senior managers should be developed as part of a cross-sector sponsorship/mentoring programme. These individuals should be sponsored by CEOs across the FTSE 350 through a well-structured and facilitated scheme.
Click here to download a full copy of the report.
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