FTSE 100 firms make ‘significant progress’ on boardroom diversity

Parker review finds four in five top listed companies now have at least one ethnic minority board member, but experts say more needs to be done to develop talent pipelines

FTSE 100 firms make ‘significant progress’ on boardroom diversity

The UK’s top listed companies have made “significant progress” in improving ethnic representation on their boards, the government-backed review into boardroom diversity has found. 

The latest report from the Parker Review found 74 of the FTSE 100 companies had ethnic representation on their boards in November 2020, compared to just 52 in January of the same year. This had increased to 81 by March this year, the report found.

The report, which is based on voluntary submissions from companies, found that of the 998 positions on the boards of companies that responded, 124 (12 per cent) were held by people from ethnic minorities.

As of March 2021 there were 118 directors in the FTSE 100 from an ethnic minority – defined as those who “identify as or have evident heritage from African, Asian, Middle Eastern, Central and South American regions” – up from 92 in 2020. Of these, 54 per cent were women (up from 42 per cent in 2020), and 36 per cent identified as British citizens.

There were also five directors from ethnic minorities who were on more than one FTSE 100 board and eight who also sat on FTSE 250 boards.

However, the report said progress remained slower when looking at key functions. Only five ethnic minority directors occupied a CEO position, compared to six in 2020, all of whom are men.

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John Parker, chairman of the Parker Review Committee, said the survey “represents significant progress towards the target” of having at least one director from an ethnic minority by December 2021.

“Corporate Britain, in my view, is becoming more comfortable with boardroom diversity. I believe too that the majority of FTSE board leaders want British companies to be seen not only as the best governed in the world, but also comprising society's best diverse talents,” said Parker.

“We would hope the remaining companies in the FTSE 100, who still have time to meet the target, will ensure they follow this encouraging lead and align with the business case that underpins the review.”

Abdul Wahab, inclusion and diversity adviser at CIPD, described the progress made by FTSE 100 companies as “amazing, especially given the context of the pandemic and the resulting economic fallout.

“There now seems to be a real possibility of meeting the ‘One by 2021’ target. Businesses need to work towards building on this success and create lasting change,” he said. “The focus needs to be on building diverse talent pipelines across all levels and fostering an inclusive organisational culture where everyone can thrive.”

However, Lawrence Gosling, editor-in-chief of DiversityQ.com, said not enough progress had been made since the first review in 2015. “It’s troubling that not all the companies in the FTSE responded to the survey,” he said.

Three FTSE 100 companies did not respond to this year’s survey, while two more responded but said they were unable to provide information on ethnicity at the time.

Gosling said more needed to be done to increase the pool of ethnic minority candidates for board-level positions, and called on the government and businesses to do more to train and educate potential executives.

“Many of the current training programmes for directors are too expensive, particularly for people who work in the public sector, or run their own successful businesses,” he said.

“The companies that make up the FTSE 100 are largely multinational businesses, so they’re not really understanding the ‘global mood music’ about the importance of ethnic diversity, particularly given the significance of the Black Lives Matter movement in 2020,” Gosling added.

Sandra Kerr, race equality director at Business in the Community, agreed there was more progress to make and urged businesses not to lose momentum as a result of the coronavirus crisis. “The Covid-19 pandemic has exacerbated racial inequality in the UK labour market. We can’t let it slow us down when it comes to ethnically diverse representation in the boardroom,” she said.

Ann Francke OBE, chief executive of the Chartered Management Institute, added that the events of last year “added a renewed impetus to the diversity and inclusion agenda”, and called for the government to introduce ethnicity pay reporting as soon as possible. "A key enabler of progress is better data,” she said.

Francke added that many businesses that had improved diversity had seen benefits including better financial performance and an increased ability to attract and retain talent. “This will boost the performance of companies and play a key role in ensuring that they are able to build back better,” she said.