As of November 2020, the official cut-off date for feedback, over a fifth (21 companies) of organisations within the FTSE 100 were lacking any ethnic diversity on their boards.
In addition to this, three companies offered no responses and two were unable to provide any further information, suggesting this lack of diversity could have been more prevalent than reported.
However, there have been some indications that progress is being made in this arena. By this month (March 2021), a further seven companies within the FTSE 100 reported that they had appointed a director from a minority ethnic group.
This was in addition to the three-quarters of firms (74 companies) which did have ethnic representation on their boards in November 2020, showing diversifying the board-room is becoming a more focal issue for FTSE 100 companies.
Overall, 124 out of the 998 board positions, across the FTSE 100 companies that responded to the survey, are held by 118 ethnic minority (12 per cent) directors, compared to only 95 directors in 2020.
Furthermore, of the 118 ethnic minority directors, almost half (46 per cent) are women – showing that gender representation is also increasingly important for companies as well.
However, there is still progress to be made in the “key functional roles” of boards, the Review found. Only five ethnic minority directors occupy a CEO position, all of whom are men. This is actually a decrease in comparison to previous figures which showed that, throughout 2020, there were six ethnic minority directors that held CEO/Chair positions.
The Parker Review has emphasised their ‘One for 2021’ target which calls on all FTSE 100 boards to have at least one director from an ethnic minority background by December 2021.
Sir John Parker, Chairman of the Parker Review Committee, commented on the “significant progress” that these figures represent:
Achieving this result demonstrates committed leadership by FTSE 100 Chairs, their boards, and the headhunting community, to align with the Review’s ethnic diversity objectives. We would hope the remaining companies in the FTSE 100, who still have time to meet the target, will ensure they follow this encouraging lead and align with the business case that underpins the review.
Corporate Britain, in my view, is becoming more comfortable with boardroom diversity. I believe too, that the majority of FTSE board leaders want British companies to be seen, not only as the best governed in the world, but also comprising of society’s best diverse talents.
However, Tracey Brady, Managing Director, Company Matters, Link Group, argued that these results are not truly representative:
We must understand that the top FTSE 100 listed companies in the UK, who tend to dominate attention in the diversity debate, are not fully representative of UK corporate culture.
There are more than a thousand smaller listed companies on the main market and AIM (Alternative Investment Market) indices, and tens of thousands of private companies. They employ far more people between them than the top FTSE 350 companies and tend to be more domestically focused, meaning they reflect UK company leadership and the lived experience of the UK workforce much more than their very large, often global, counterparts.
Our findings show that out of a total of 326 AIM UK 50 directors, 97 per cent are white, as are 95 per cent of those in the FTSE Small Cap 100. If such large proportions of the population are not rising to the top because of their race, gender or age, then huge pools of talent are going untapped, limiting the potential for individuals and the whole economy.
As we look to a post-pandemic future, we are going to need to tune every aspect of fitness to Olympic standard to get the UK back on its feet. Making sure that UK business is reflective of modern society is an essential part of that. Only then can the economy truly go full speed.
*This research was taken from the Parker Review which was conducted through survey research of all FTSE 100 companies. Data on companies’ directors was obtained through an online survey of FTSE 100 companies, with the cut-off 02 November 2020. Further desktop research was carried out between December 2020 and February 2021.