BRITAIN’S financial watchdog, the Financial Conduct Authority (FCA) has warned FTSE companies that at least one of the senior board members should be a woman and one board member should be from an ethnic minority background.
The FCA is moving forward with the new rules that will require companies to disclose information about the number of women and ethnic minorities on their boards and senior leadership teams to improve transparency for investors.
Companies that want their shares to trade on UK stock exchanges must ensure that 40 per cent of their board members are comprised of women – any failure to meet set targets must be accompanied by an explanation as to why the company has fallen short.
The rules will apply to almost all UK and foreign companies listed on regulated markets in the UK, and firms will be required to begin reporting diversity in their boardrooms by the beginning of next year.
“As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress,” said Sarah Pritchard, executive director of markets at the FCA.
Diversity and inclusion on company boards and executive management consultation conducted by FCA closed on 20 Oct 2021 collecting 540 responses from institutional market participants, trade bodies and interest groups. FCA came out with the new rules yesterday and the rules apply to the accounting periods from the beginning of this month (April 2022).
Businesses, according to the watchdog, will be able to choose the best way of collecting data from their workforce and report on progress.
In three years, the rules will be reviewed to ensure that they are still in effect and that the diversity targets are still appropriate.
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