Ethnic diversity in the Boardroom

In 2015 Sir John Parker, Chairman of mining company Anglo American PLC and member of the Davies Women on Boards Review Panel, was tasked with conducting an official review into ethnic diversity in UK Boardrooms. Last week he published his findings, which include the following:

- 92% of the 1,087 directors of FTSE 100 companies are white, and there are only 90 individual directors of colour;
- Seven companies account for over 40% of directors of colour, and five of these companies have headquarters historically located outside the UK;
- 53 FTSE 100 companies have no directors of colour at all.

UK Boardrooms do not therefore reflect the diversity of the UK population, of which 14% identify themselves as a person of colour or as coming from a non-white ethnic group. Interestingly, less than a quarter of directors of colour are UK citizens, with British directors of colour making up only 1.5% of the total director population. This suggests there is a particular barrier to developing and promoting home grown talent from a diverse range of ethnic backgrounds.

The report suggests (and invites comment on) recommendations aimed at improving this state of affairs:

Increasing the ethnic diversity of UK Boards

• Each FTSE 100 Board to have at least one director of colour by 2021, and each FTSE 250 Board to do the same by 2024 (N.B. it is not currently proposed that this be a statutory requirement, although this may be revisited if little progress is made);
• Nomination committees of all FTSE 100 and 250 companies to require their HR teams and recruitment agents to identify and present qualified people of colour to be considered for Board appointments;
• The relevant principles of the voluntary gender code of conduct for executive search firms to be extended to apply to the recruitment of minority ethnic candidates as directors of FTSE 100 and 250 companies.

Developing candidates for the pipeline and planning for succession

• FTSE 100 and 250 companies to develop mechanisms to help identify, develop and promote people of colour within their organisations to build a pipeline of candidates for senior positions;
• Led by Board Chairs, existing FTSE 100 and 250 Board directors to mentor people of colour within their own companies to ensure their readiness to assume Board or other senior positions;
• Companies to encourage and support candidates drawn from diverse backgrounds, including people of colour, to take on Board roles internally and externally (including as trustees of educational trusts and charities) to help develop oversight, leadership and stewardship skills.

Enhancing transparency and disclosure

• A description of the Board's policy on diversity to be set out in the annual report with a description of the company's efforts to increase ethnic diversity, including at Board level;
• Companies that do not meet Board composition recommendations by the relevant date to explain in their annual report why they have not been able to achieve compliance.

Given the growing international profile and, in some cases, rise to power of political figures whose rhetoric is openly hostile to minorities, it seems particularly important now that all of the groups which make up society are appropriately represented in positions of prominence, in the world of business and elsewhere.

Comments on the Parker Review are invited by 28 February 2017 and a final version, including recommendations, is expected to be published thereafter. The report can be found here.