The UK’s biggest organisations are still “way off” meeting their board diversity targets, with some all-white boards remaining in the FTSE 100.
Three years ago the Parker Review recommended that by the end of 2021, no member of the FTSE 100 would lack a black, Asian or minority ethnic (BAME) person as a director. FTSE 250 firms were also encouraged to meet this target by 2024.
But its 2020 update report shows that, while some progress has been made, there is still a way to go before organisations hit these targets. Of the 256 FTSE 350 firms that responded to its 2019 survey, 59% had not met their respective target.
In the FTSE 100, 31 of 83 respondent companies (37%) did not have at least one BAME director, compared with 54 in 2018 and 51 in 2017.
Of the 173 FTSE 250 firms that responded, 119 (69%) had not yet met the target that had been set for 2024.
Sir John Parker, chair of the Parker Review Committee, said: “With less than two years to go to meet the first of these targets, it might seem that we are way off course. However, our report suggests that whilst we may not yet be up to speed, it could still be possible to complete our journey in time.
“To start with, we should recall that in the previous and parallel drive to create greater gender diversity on company boards, led by Lord Davies… it took some time to get the wind in our sails. Yet we hit the target of 25% within the five years we set ourselves.
“I am glad to say that 11 FTSE 100 companies which had previously never had a person of colour on their boards have now made appointments that take them out of the all-white era. And intriguingly, our data shows that women of colour have, if anything slightly outpaced the men – though neither group is yet anywhere near being represented on FTSE 100 boards in the numbers that their talents deserve.”
John-Claude Hesketh, global managing partner at executive search firm Marlin Hawk, said businesses must stop blaming a lack of “suitable” candidates on their lack of diversity and instead focus on developing BAME talent internally.
“Without executives willing to take the time to train and develop a diverse individual to grow into a role and progress in their career, the gap we currently have will continue to exist for many more years to come,” he said.
“It’s far easier to just employ somebody from outside the business who can just step in and get the job done, rather than nurture talent from within. This is the real crux of the issue, and something that businesses of all sizes must address if we’re to tackle the diversity gap.”
Research by networking group and diversity consultancy INvolve claims that UK economy could be losing up to £2.6 billion due to ethnic minority discrimination. Its founder, Suki Sandhu, said it was difficult to comprehend why organisations were “dragging their heels” on the issue.
“I’m not saying we fire all the old white men. But processes that encourage diversity and remove the barriers that are preventing ethnically diverse talent from rising to the top must be introduced,” he said.
“The solution doesn’t stop there. We must celebrate business leaders who are succeeding to show the next generation of leaders that it is possible. Until we do that we are never going to see leadership of UK companies that is reflective of the population.”
Organisations in the FTSE Small Cap 100 and the AIM UK 50 markets are further behind their larger peers when it came to diversity on boards, separate research by Company Matters, part of secretarial service Link Group, found. Ninety-six per cent of directors in these markets are white, and 80% of their boards are all-white.
Tracey Brady, managing director at Company Matters, said: “Targets have clearly moved the dial at FTSE 350 level. It may be time for the government to shift its focus to representation in smaller companies, but this push for change also needs to come from the bottom up.
“It’s vital that AIM and FTSE Small Cap companies step up and engage with the need to diversity their boards and senior management. Not only is diversity shown to improve the productivity and profitability of companies in their own right, but these smaller companies are a major talent pipeline for the FTSE 250. If smaller businesses start doing the right thing and behave as good corporate citizens, we may be able to make greater and faster change in the UK.”