The FCA has finalised rules requiring listed companies to report information and disclose against targets on the representation of ‘women’ and ‘’ethnic minorities’ on their boards and executive management, making it easier for investors to see the diversity of their senior leadership teams.
The FCA’s approach sets positive diversity ‘targets’ for listed companies. If they cannot meet them, they need to explain why not.
The rules will apply to listed companies for financial accounting periods starting from 1 April 2022. The FCA will review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.
This work reflects the FCA’s focus on speeding up the pace of change around particularly obvious diversity factors in financial services, such as the targets of at least 40 per cent of the board should be ‘women’, at least one of the senior board positions (chair, chief executive officer (CEO), chief financial officer (CFO) or senior independent director (SID) should be a ‘woman’, and at least one member of the board should be from an ‘ethnic minority’ background excluding ‘white ethnic groups’.
The descriptions and definitions used have, however, drawn criticism, both for the inabilty to recignise 'white ethnic groups' and from trans canpaingers for counting trans women as 'women'.
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