The Financial Conduct Authority has finalised its review of the rules requiring listed companies to report information and to disclose against targets on the specific representation of women and ethnic minorities on their boards and among executive management.
Under the ‘comply or explain’ policy statement PS22/3, the new targets include that at least 40% of the board should be women; at least one of the senior board positions (chairman, CEO, CFO or a senior independent director) should be a woman; and at least one member of the board should be from an ethnic minority background – excluding white ethnic groups.
Sarah Pritchard, executive director of markets at FCA commented: "As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress."
The new rules will apply to listed companies for financial accounting periods starting from 1st April 2022. The watchdog announced its intention to review the rules in three years’ time – to check if the diversity targets are still appropriate. If regulated firms cannot meet the FCA’s targets, they need to explain why not.
Responding to the statement, the Chartered Insurance Institute suggested the new rules do not properly address the much wider challenges and opportunities surrounding the topic of diversity.
“Whilst we welcome the FCA’s policy statement this morning, we feel that what is still needed involves dedicated constructive planning and affirmative action to get to where we collectively feel we should be heading for the benefit of all,” a spokesperson from the CII noted.
“The Chartered Insurance Institute actively measures the diversity of its board and executive committee with identified actions and has long maintained that the key to innovation and success is found in properly accessing the diversity of ideas found within the full breadth of society.
“It is important to accept and understand that when our talent pool is limited, we are in fact limiting ourselves as an organisation, and therefore limiting the benefits we can bring to those we serve.”
The FCA's Policy Statement PS22/3 "Diversity and inclusion on company boards
and executive management" may be read in full here: https://www.fca.org.uk/publication/policy/ps22-3.pdf
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