Posted on Jul 28, 2021, 5:33 PM
UK market regulator FCA has launched a consultation on a series of proposals to improve transparency on ethnic diversity and the gender ratio in the management teams of listed companies.
In particular, the FCA recommends that the latter publish annual data indicating whether or not they have achieved certain objectives in the composition of the board of directors and management teams. Companies are invited to indicate if they miss them, specifies the press release published on Wednesday.
More women and minorities
Among the desired goals, the FCA envisions 40% of women on the board of directors, including transgender women, and at least one of the board leadership positions (presidency, executive general management, finance department) allocated to a woman.
In addition, at least one board member should be from an ethnic minority, adds the FCA. The regulator also recommends to “take into consideration broader aspects of diversity” such as “sexual orientation, disability, socio-economic origin” and others. The regulator specifies that “diversity will be a subject of continuous attention for the FCA beyond the proposals mentioned here”.
The envisaged objectives would not be compulsory and the FCA therefore does not set “quotas”. While many companies already publish data related to the diversity of their teams, these recommended measures would help better compare companies on the same criteria, explains the FCA.
“There is currently a lack of standards and mandatory transparency on diversity in listed companies […] but investor interest is growing and companies are paying more and more attention to questions of ethics and social responsibility, ”comments Clare Cole, director of market supervision.
A glaring lack of diversity
Many institutions and companies in Great Britain recognize a lack of diversity within their teams and are putting forward measures to remedy it, like the Bank of England (BoE). Last week, she published an internal report launched in the wake of the murder in the United States of George Floyd, which had given a global impetus to the movement “Black Lives Matter”. In this report, the BoE found, for example, that ethnic minorities (black, Asian or others) tended to move more slowly in the hierarchy or to leave the institution more. The European Central Bank had also called for more diversity in European banks.
Employees, excluding positions of responsibility, from the so-called BAME minorities (acronym for blacks, Asians and other minorities), represented 21% of the BoE’s workforce, but their share in management fell to 8%. In order to catch up, the BoE said it wanted to reach between 18 and 20% of BAME minorities in senior positions by 2028.