All-white FTSE 100 firms will be expected to have become a thing of the past come 2021, according to the final recommendations from a government-backed report into improving diversity of UK businesses.
Over half of the FTSE 100 firms do not have any ethnic minorities on their board at all.
The Parker Review Committee, headed up by Sir John Parker, today publishes its final report telling business leaders to improve the ethnic and cultural diversity of UK boards to better reflect their employees and the communities they serve.
The three key recommendations set out by the report are:
- Increase the ethnic diversity of UK boards by proposing each FTSE 100 board to have at least one director from an ethnic minority background by 2021, and for each FTSE 250 board to do the same by 2024
- Develop a pipeline for candidates and plan for succession through mentoring and sponsoring
- Enhance transparency and disclosure to record and track progress against the objectives
Transparency, for example, can be improved by companies setting out their policy on diversity in their annual report, the review said. Those that don't meet the board composition targets by the set date "should disclose in their annual report why they have not been able to achieve compliance".
The initial consultation version of the report was released back in November, inviting feedback from board members and senior executives, as well as representatives from government.
As of the end of July, only 85 of the 1,050 director positions in the FTSE 100 are held by ethnic minority people, and only two per cent of director positions are held by ethnic minorities who are UK citizens, though this group makes up 14 per cent of the total UK population.
The steering committee will track the progress made against the recommendations on an annual basis.
Parker, who announced he was stepping down as Anglo American chair earlier this year, said the report had identified "clear commercial benefits" in addressing the issue, and progress needed to be made "if we want Britain to continue to be at the forefront of global business".
Today’s FTSE 100 and 250 Boards do not reflect the society we live in, nor do they reflect the international markets in which they operate. Whilst we are making good progress on gender diversity in the boardroom, we still have much to do when it comes to ethnic and cultural diversity.
Business minister Margot James said: "I urge our largest companies to lead from the front on this issue and take up Sir John Parker's recommendations to promote greater boardroom diversity to reap the economic and social benefits."