FTSE boards will struggle to hit ‘one by 2021’ ethnic diversity target, report finds

Experts say lack of BAME representation is unacceptable as review shows a third of the UK’s top 100 listed firms have no non-white board members

More than a third of the UK’s top companies do not have any ethnic minority representation on their boards and will struggle to hit diversity targets, a government-backed report has said.

The Parker review, set up to improve ethnic diversity on the boards of UK listed companies, found 37 per cent of FTSE 100 firms still had no non-white members on their boards.

The figure is a slight improvement on 2017, the first year of the review, when half of boards had no ethnic minority representation. But the report warned it would still be a challenge to meet the review’s ‘one by 2021’ target – an aim to have at least one BAME individual on every FTSE 100 board by this date.

This year was also the first time the review looked at FTSE 250 boards, which performed even more poorly than the FTSE 100. Of the 173 FTSE 250 companies analysed, 119 (69 per cent) had no ethnic diversity on their boards.

Across the FTSE 350, 59 per cent of boards had no BAME representation. 

Dr Jill Miller, senior policy adviser for diversity and inclusion at the CIPD, said the lack of ethnic diversity at the top of organisations was unacceptable in 2020. “The speed of progress reported today is disappointing,” she said. “Systemic change is needed to ensure businesses are building diverse talent pipelines all the way through their organisation to support long-term change. Action is long overdue and must be a business priority.”

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Miller said HR had a “vital role to play” in ensuring recruitment and promotion practices were fair and inclusive, and that analysis of workforce data would drive understanding and help break down barriers faced by different groups. “First [HR] needs to understand the make-up of their workforce – and there is still considerable work to do here,” she said.

Miller added that a reluctance to talk about race and ethnicity was preventing sustainable change and the creation of inclusive work cultures: “It is essential these conversations are happening at a leadership level to ensure ethnic diversity stays firmly on the agenda.”

The review, produced by Sir John Parker alongside EY and the Department for Business, Energy & Industrial Strategy, included additional recommendations to accelerate the rate of progress, including the introduction of full company reports on ethnic diversity in compliance with the Corporate Governance Code.

It also outlined plans to develop a pool of high-potential ethnic minority leaders as part of a cross-sector sponsorship programme across FTSE 350 companies. It recommended that executive recruiters go beyond compliance with the Hampton-Alexander review, so that reporting on female representation was extended to include reporting on ethnic minorities.

Commenting on the report, Dr Doyin Atewologun, reader and director of the Gender, Leadership and Inclusion Centre at Cranfield, said some of the lessons on diversity learned from improving female representation on boards could be transferred to ethnic diversity, but there would still be challenges ahead.

One of the important differences, said Atewologun, is that while men tend to already have personal relationships with women – and therefore have more empathy with and understanding of the issue – white business leaders don’t always have close relationships with people from other ethnic groups.

“It's easier to see [a women] as a wife, sister or daughter but there is not the same connection [between] men in power and people of colour,” Atewologun said. “The chairs on FTSE 350 [firms] will know women intimately but will not have the same experience with a BAME friend. This disconnect might mean more work will need to be done before we see change.”

In total, 98 out of 868 directors across the FTSE 100 who disclosed their ethnicity had ethnic minority backgrounds. In the FTSE 250, just 80 out of 1,503 directors who disclosed their ethnicity had a minority background.

Just 15 ethnic minority directors held the position of chair or CEO across the FTSE 350.

Arun Batra, partner at EY, chief executive of the National Equality Standard and an adviser to the review, said: “We recognise that meaningful change takes time, but the data tells us that the current pace of change is not quick enough to meet the targets set by the review.

“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.”