New targets set for ethnic diversity in companies

The Parker Review has published its 2023 Update Report on the progress made against the targets for ethnic diversity on UK boards and has also set new targets for UK companies.

The Parker Review was asked by the Government in 2015 to explore how to increase ethnic and cultural diversity on the boards of UK companies. It recommended that FTSE 100 companies should have at least one ethnic minority director on the board by December 2021 and FTSE 250 companies should have at least one ethnic minority director on the board by December 2024.

The 2023 Update Report notes that as at December 2022:

• 96% of all FTSE 100 companies had met the target and 18% of all FTSE 100 director positions were held by an ethnic minority director;
• in the FTSE 250, with two years still to go until the deadline to meet the target, 67% of the 224 companies that responded had at least one ethnic minority director (equating to 60% of all FTSE 250 companies); and
• 49 FTSE 100 companies and 28 FTSE 250 companies had more than one ethnic minority director.

The Parker Review recognises that the composition and diversity of the board may only have a limited impact on the wider culture at the company. It also acknowledges that there are some very significant entities in the UK economy which are not part of the FTSE index. With this in mind, the Parker Review has set the following new targets:

• by December 2023, FTSE 350 companies should set themselves a target, to be met by December 2027, for the percentage of their senior management that self-identify as being from an ethnic minority; and
• by December 2027, the top 50 private companies should have at least one director who self-identifies as being from an ethnic minority on their board.  By December 2024, they should also have set themselves a target, to be met by December 2027, for the percentage of their senior management who self-identify as being from an ethnic minority. The definition of top 50 private companies is the same as that used by the FTSE Women Leaders Review.