One of Britain’s largest institutional investors, Legal & General, has warned FTSE 100 companies with all-white boards that it will vote against them if they do not hire a Black, Asian or minority ethnic (BAME) director by 2022.
L&G issued the ultimatum to the 30-plus blue-chip firms that do not have a director from an ethnic minority background last week, The Times reported.
The investor has written to all FTSE 100 companies and all US companies in the S&P 500 to tell them it expects them to have appointed at least one BAME director by the start of 2022.
L&G told firms it will vote against the re-election of the companies’ nomination committee chairs, who lead the panels responsible for board appointments, if they fail to meet this target.
The move follows the Black Lives Matter protests across the world over the summer. L&G, which manages over £1.2 trillion of assets, is thought to be the first big UK investor to threaten to vote against companies that fail to take action on director diversity.
Some 37 FTSE 100 companies had no BAME directors in February, according to the Parker Review – an official body established to monitor the ethnic diversity of UK boardrooms. Some blue-chip companies have since appointed directors from minority ethnic backgrounds.
In its initial report in 2017, the Review had recommended that all FTSE 100 companies should have at least one BAME director by 2021. However in an update this year, the body said it would be “challenging” for UK blue-chips to hit the target by next year.
The Confederation of British Industry last week announced a campaign to ensure that all FTSE 100 companies have BAME board members by 2021, saying that progress on improving boardroom diversity in Britain had been “painfully slow”.
“The horrifying killing of George Floyd and so many others has led many institutional investors to think much more seriously about structural racism and inequality,” L&G wrote to wholesale clients, The Times reported.
L&G itself meets its diversity target following the appointment of Ric Lewis, the founder of property investment board Tristan Capital Partners, to its board in June.
City A.M. has reached out to Legal & General for comment.