The Financial Reporting Council (FRC) has launched a consultation on whether the UK Corporate Governance Code should be revised to require listed companies to publish their policy on gender diversity in the boardroom and report against it annually.
This was a recommendation in Lord Davies’ report, ‘Women on Boards’, which was published in February. Views are also sought on whether the Code should identify some of the key issues to be considered when boards carry out their regular effectiveness reviews, and on the timing of any changes that might be made to the Code as a result of the consultation.
Introducing the consultation document, FRC Chairman, Baroness Hogg, said:
“Board diversity and effectiveness are closely linked. Diversity widens the perspectives brought to bear on decision-making, avoids too great a similarity of attitude and helps companies understand their customers and workforces. A board with too few women on it risks a weakness in at least one of these respects.
“It was these concerns that led us to add a reference to the benefits of diversity in general, with specific reference to gender, when the UK Corporate Governance Code was updated last year. But as Lord Davies noted in his report, the rate of change in recent years has been glacial. That is why we are now responding to his proposal that boards should report on their gender diversity policy by consulting on whether it would be appropriate to add this to the Code.”
The consultation closes on 29 July 2011 and a decision on whether to amend the Code and, if so, the timetable for doing so, will be announced later in the year.
Matthew Fell, CBI Director for Competitive Markets, commented on the consultation:
“We have been calling for action to get more women on boards, and believe that encouraging companies to report on their progress is the best way to achieve this.
“In our submission to Lord Davies’ review we said firms should report against internally-set targets, which reflect their different circumstances. It is good news that the FRC is proposing to follow this approach. Given the slow progress on improving boardroom diversity, the FRC should implement changes to the Corporate Governance Code sooner rather than later.