Ethnic diversity on boards

The Parker Review has published an update report on the ethnic diversity of UK boards. It says that, although progress has been made to increase the representation of ethnic minorities on FTSE boards in the UK, there is still much more work to be done.

In 2015, the government asked Sir John Parker to conduct a review of the ethnic and cultural diversity on UK company boards. Sir John published his final recommendations in October 2017 (see our corporate update 2017/21). The recommendations include:

• each FTSE 100 board should have at least one director of colour by 2021 and each FTSE 250 company board should have one by 2024; and
• companies should develop mechanisms to identify, develop and promote people of colour and provide details of their efforts to increase ethnic diversity in their annual report.

The key findings of the 2020 update report are that:

• 52 FTSE 100 and 54 FTSE 250 companies have achieved the target of having one director of colour on the board;
• there were 172 directors of colour in the FTSE 350, holding 178 director positions. This amounts to 7.5% of all FTSE 350 directorships where the ethnicity of directors was known; and
• only 15 directors of colour across the FTSE 350 companies that responded to the Parker Review occupied positions of chair or CEO.

The update report also makes further recommendations in relation to measuring board level diversity and building a pipeline for ethnically diverse board candidates, including that companies should:

• report fully on their ethnic diversity policies and activities, covering the board appointment process and the work of the nomination committee, as part of their Section 172 reporting requirements and their compliance with the UK Corporate Governance Code (ideally with reference to the Parker Review); and
• build a developed pool of high potential ethnic minority leaders and senior managers as part of a cross-sector sponsorship/mentoring programme.