Monday 3 February 2020 12:01 am

AIM and FTSE Small Cap firms ‘falling behind’ on board diversity

London’s FTSE Small Cap (SMC) and AIM exchanges are lagging behind their larger peers when it comes to diversity on company boards, according to a new report. 

A mere 15 per cent of AIM directors are women, while over a third of companies listed on the market have all-male boards, according to a study by Company Matters. 

By contrast, the blue-chip FTSE 100 index met a target for listed companies to have 25 per cent female board members in 2015. The target has now been extended to 33 per cent of FTSE 350 firms by 2020 — an aim likely to be met.

The discrepancy between the smaller exchanges and the main market is even more stark when it comes to racial diversity. 

In AIM and the FTSE SMC, 96 per cent of directors are white, while 80 per cent of boards are all-white. This compares to 50 per cent of FTSE 100 boards. 

Tracey Brady, managing director at Company Matters, said the study’s findings “reveal a worrying picture”.

“The companies themselves may be interesting and diverse, but their Boards are falling behind,” she said.

Some 44 per cent of new board appointments to the FTSE SMC over the last 18 months were women, taking the market’s total to 28 per cent.

Although still lower than the FTSE 100, this means the FTSE SMC is more gender diverse than the FTSE 250. However, just four to five per cent of executive roles in Small Cap companies are held by women. 

“Diversity and inclusion are at the top of the agenda for many companies, and over recent years we’ve seen swathes of research measuring the FTSE 350. While those companies do account for a large slice of the economy, many are global corporates and don’t reflect the situation in the UK,” said Brady.

“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,” said Brady. 

“Our small companies are failing to reflect the very rich and diverse nature of Britain today. We are a country where women are graduating at a greater rate than men, but when it comes to helping them climb career ladders we are failing,” said Ann Cairns, global co-chair of the 30 Per Cent Club, which campaigns for better gender diversity on boards.

“Our small businesses need to compete on a global stage and their lack of diverse thinking can impact their innovation, creativity and ultimately business survival in a post-Brexit world.”

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