Number of ethnic minority FTSE 350 directors jumped 108 per cent in 2021, study finds

Although ‘great strides’ have been made, experts say firms need to proactively engage with inclusion and diversity efforts on their boards

The number of FTSE 350 companies with a director of colour on their board increased by 108 per cent in 2021, research has revealed.

The analysis of 272 companies in the FTSE 350, by Thomson Reuters, found that there were 123 directors of colour in 2021, compared to just 59 last year. 

This meant nearly half (45 per cent) of FTSE 350 companies, excluding investment trusts, now have a director of colour on their board, up from 21 per cent in 2020.

Pushing for progress towards better representation on FTSE 350 boards is part of the conclusions of the Financial Conduct Authority (FCA) consultation on diversity on boards and executive committees. 

The consultation includes proposed amendments requiring listed companies to publish a 'comply or explain’ statement every year on whether they have achieved targets for gender and ethnic minority representation on their boards, as well as provide data on the gender and ethnicity composition of their boards and most senior level of executive management.

The government-commissioned Parker Review is also calling for at least one director of colour on each FTSE 100 board by the end of this year, and by 2024 for FTSE 250 boards.

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“Businesses must proactively implement measures to ensure the workplace is equal and inclusive for all its staff,” says Kate Palmer, HR advice and consultancy director at Peninsula.

She suggested that gender and ethnicity pay gap reporting can be a useful way of evaluating the number of employees from underrepresented groups and proactively take steps to increase this. 

“However, organisations should also consider wider approaches to encouraging workplace inclusion,” she warned. 

Palmer said this could be done through diversity and unconscious bias training for managers and communicating a clear zero-tolerance approach to any form of bullying, discrimination or harassment related to a protected characteristic.

Thomson Reuters’ research also revealed that a total of 402 women hold directorships across FTSE 100 boards, representing 39 per cent of all directorship positions: an increase on the third (35 per cent) recorded last year. 

Of all executive roles in the FTSE 100, 14 per cent are held by women, the study found, and the boards of 46 companies are now made up of at least two-fifths (40 per cent) women. 

This compares with 31 in 2020 and just 25 in 2019, which the report cited as an indication of strides towards gender parity at board level.

However, of the 402 directorships held by women on FTSE 100 boards, only 7.5 per cent are in executive roles while, in 2020, there were 361 directorships held by women on FTSE 100 boards with 8.5 per cent of those positions an executive role.

Hilary Owens Gray, director in practical law at Thomson Reuters, said while there were “great strides” being made, there was more progress to be made. 

“It is important that companies continue to make improvements in this area, as there seems to be no slowing in the drivers for increased board and leadership diversity, including pressure from politicians and regulators,” she said.