FCA publishes new reporting requirements for board diversity

Greg Davies 2022

Greg Davies
Director of Market Development, Assurity Consulting
29th April 2022

The document sets out new rules for listed in-scope companies to publish information on meeting board diversity targets including: 

  • At least 40% of the board are women (including those self-identifying as women).
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Senior Independent Director (SID) or Chief Financial Officer (CFO)) is a woman (including those self-identifying as a woman).
  • At least one member of the board is from a non-White ethnic minority background (as referenced in categories recommended by the Office for National Statistics (ONS)).

The requirement being boards would disclose in their annual financial reports on these targets on a ‘comply or explain’ basis.

It further requires those companies to also disclose (in annual financial reports) “a standardised numerical table on the diversity of their board and executive management by gender and ethnicity.”

The document can be found at - PS22/3: Diversity and inclusion on company boards and executive management (fca.org.uk)

Wider EDI (Equality, Diversity and Inclusion) initiatives are becoming increasingly common place amongst organisations looking to make sure of a fairer treatment and opportunity for all. One of the stated aims of the new requirements being:

“These measures will improve transparency on the diversity of company boards and their executive management for investors and other market participants, increasing engagement on this area and informing investment decisions. We hope, in turn through investor pressure, issuers are encouraged towards greater diversity in practice, which may have further benefits for corporate governance and decision-making.”

Twelve years on from the introduction of the Equalities Act 2010, it is a further move to remove both discrimination and prejudice in the workplace based on an individual or group of individual's protected characteristics. It also adds to an already growing list of topics that organisations must be considering as part of their sustainability agendas.