Each FTSE 100 board should have at least one director from a minority ethnic background by 2021, and each FTSE 250 board by 2024, according to the Parker review.
Beyond One by ‘21 reveals that out of 1,087 director positions in the FTSE 100 only 8% are held by BAME people. Of these, 1.5% are UK citizens, despite the fact that 14% of the total UK population is from a non-white ethnic group.
Chair of Anglo American John Parker, who was appointed in 2015 to chair the industry-led review, said the boardrooms of Britain’s leading companies do not reflect the ethnic diversity of either the UK or the stakeholders that they seek to engage and represent. “Ethnic minority representation in boardrooms across the FTSE 100 and 250 is disproportionately low,” he said. “Many business leaders would agree that boards that embrace gender and ethnic diversity benefit in their decision-making, by drawing on an array of skills, experience and diverse views.
“We hope the recommendations made for consultation will heighten awareness of the growing pool of talent in the ethnic community, help to strengthen boardrooms across the UK, and keep corporate Britain at the forefront of global business.”
The review recommends that nomination committees of all FTSE 100 and 250 companies should require their HR teams or search firms to identify and present qualified BAME people to be considered for board appointment when vacancies occur. It also advises organisations to focus on the pipeline of potential board-capable candidates.
Companies will also be required to report on their diversity efforts. Those that do not meet board composition recommendations by the relevant date should disclose in their annual report why they have not been able to comply, the review says.
Business minister Margot James said there is a business case for diversity. "The boardroom must reflect modern Britain," she said. “Companies will do better if they make better use of the talent available and increase boardroom diversity to reflect their workforces and wider society. Sir John Parker's review is an important industry-led contribution and I look forward to the results of the consultation."
A full report is due to be published in 2017.