UK’s Largest Companies Fail to Comply With FCA’s New Gender-Diversity Quotas

Seven of the UK’s 10 largest listed companies have failed to comply with the FCA’s new gender-diversity quotas, a reminder of the scale of the challenge facing businesses as they look to improve diversity in their upper ranks.

AstraZeneca Plc, Unilever Plc and Rio Tinto Plc are among the firms to miss the Financial Conduct Authority’s board gender-diversity requirements of at least 40% female directors, according to a Bloomberg Intelligence report. Rio Tinto also doesn’t have a woman in a senior board position.

Among the largest lenders, HSBC Holdings Plc and Barclays Plc miss the FCA’s 40% target and at HSBC no senior board position is held by a woman, according to the report.

Last year, the Financial Conduct Authority set UK-listed companies three diversity targets, including a goal for at least 40% women on their boards, in the latest bid to bolster diversity in the upper ranks of British business.

Under FCA rules, companies should also have at least one woman in the role of chief executive officer, chief financial officer or senior independent director. At least one member of the board should be from an ethnic minority background, excluding white ethnic groups.

The watchdog said that firms should publish the information in their annual financial reports for accounting periods starting from April 1, 2022. Firms that do not meet the targets are required to explain why.

In an attempt to rectify the issue, a race for female board appointments is expected in order to avoid “scrutiny and activism from investors,” according to the report.

What Bloomberg Intelligence Says

The UK’s FCA formally introduced a board-diversity requirement as part of a push to speed up the pace of change. The change not only increases the overall gender-diversity requirement for boards to have at least 40% women, up from 33% as set by the Hampton-Alexander Review, it also goes a step further, requiring at least one senior board position to be held by a woman. The rules took effect for financial years starting on or after April 1, 2022.

The new rules cap a decade-long effort to increase diversity and inclusion at board level.

— BI analysts Andrius Tilvikas and Adeline Diab

— With assistance from Dasha Afanasieva and Suzi Ring.

Copyright 2023 Bloomberg.

Interested in Diversity?

Get automatic alerts for this topic.

Source link