Responding to the FRC’s consultation document, Gender Diversity on Boards, the business group reiterated its call for the code to be revised to require listed companies to report on diversity on a ‘comply or explain’ basis.
This approach would allow firms to set their own targets for increasing diversity that reflect the nature of their business and circumstances and explain why if they fail to deliver. In practice, that could mean a company employing a large number of female staff may choose to set a higher target, but the same target may not be realistic for a firm with fewer women employees.
Katja Hall, CBI chief policy director, said: “The best way to get more women on boards is by giving companies the flexibility to set targets that reflect the realities of their businesses.
“The voluntary approach is working, with the number of female boardroom appointments steadily increasing since the beginning of the year, but we need to keep up the momentum.
“Given the scale of the challenge, the FRC should get on with revising the code as a matter of urgency. Failure to act now could put firms at risk of government or EU-imposed quotas, which would be little more than tokenism,” Hall said.
In its response to the FRC consultation, the CBI highlights the strong business case for increasing boardroom diversity, including: promoting good governance and challenging group mentality; helping companies get the best people for the job by using the most diverse selection pool; and providing a better reflection of a firm’s customer base.
