Ethnic diversity on boards

The Investment Association (IA) has published a statement calling for greater transparency on ethnic diversity on boards.

The statement notes the progress that has been made in relation to gender diversity on listed company boards following the Hampton-Alexander Review (see our blog post at the time). It also notes that the Parker Review on the ethnic diversity of UK boards recommended that each FTSE 100 board should have at least one director of colour by 2021.

The IA says that there is still significant progress to be made on improving ethnic diversity on boards, and that there should be greater transparency on the ethnic make-up of boards so that investors can assess that progress. It says that investors expect companies not just to state whether they meet the Parker Review recommendations but also to disclose the percentage of the board that comes from an ethnic minority background.

Separately, Legal and General Investment Management (LGIM) has commenced an engagement campaign on ethnic diversity on FTSE 100 boards. It says that, from 2022, it will vote against the chair of the nomination committee or the chair of the board if a company fails to meet LGIM's expectations on ethnic diversity.