The UK sets gender and ethnicity targets for company directors

The Financial Conduct Authority has set three diversity targets for UK listed companies, including a target of at least 40 per cent women on their boards, to increase diversity in the upper echelons of the UK economy.

Companies should also have at least one woman in the role of chief executive officer, chief financial officer or senior independent director, the FCA said in a statement Wednesday.

And at least one board member should be from a minority ethnic group, excluding white ethnic groups.

The watchdog said companies should publish this information in their annual financial reports and if they don’t meet the targets, they must explain why.

The rules apply to accounting periods beginning April 1, 2022, which means they will appear in reports starting in the second quarter of next year.

“As investors increasingly pay attention to diversity at the top of the companies they invest in, improving board and executive level transparency will help hold companies to account and drive further progress,” said Sarah Pritchard, Executive Director of Markets at the FCA.

The regulator’s policy follows a consultation last year and several warnings that the FCA would shed some light on how companies are increasing diversity.

According to a study by the Cranfield School of Management last year, women make up 38% of FTSE 100 boards and the corresponding figure of FTSE 250 boards is 35%

The reporting requirement will be included in the UK Listing Rules.

It stems from various corporate diversity initiatives, including the Hampton Alexander Review and the Parker Review.