Hampton-Alexander Review Increases Focus on Diversity at UK Companies
Government-backed reviews have called for greater diversity at both board and senior management levels at FTSE 350 companies.
The Hampton-Alexander Review has reiterated the call made by its predecessor, the Davies Review, for FTSE 350 boards to ensure that they comprise at least 33% female directors by 2020. However, this voluntary target has now been broadened to 33% female representation at the combined executive committee and direct report levels, albeit only at FTSE 100 companies for the time being. This focus on the executive pipeline is intended to address the slowdown in the rate of female appointments at board level.
Among the Hampton-Alexander Review’s other recommendations is a call for institutional investors to formulate “a clear voting policy on gender balance”. For its part, Glass Lewis will focus its efforts on scrutinising the efforts of FTSE 350 companies with all-male boards and will consider recommending against nomination committee chairs where there is a failure to disclose a coherent board gender diversity policy.
Elsewhere, the Parker Review’s inaugural report into the ethnic diversity of UK boards recommends that each FTSE 100 board should have at least one director of colour by 2021, and that each FTSE 250 board should have a director of colour by 2024.
Sir Parker’s recommendations have been made in light of his review’s conclusion that UK companies are failing to promote enough non-white employees to senior management positions – currently just 8% of FTSE directors are non-white as compared with 14% of the wider workforce. A consultation period is now open with Sir Parker expected to publish final recommendations during 2017.
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