By Maximilian Clarke
The Financial Reporting Council have today (Tuesday) announced a series of amendments to the UK Corporate Governance Code offering greater flexibility. Businesses failing to meet diversity targets will be given a chance to explain their situation, and the Council has again avoided the controversial use of quotas.
Commenting on the changes, Dr. Roger Barker, Head of Corporate Governance at the Institute of Directors, welcomes the greater flexibility, though warns that diversity is about more than gender.
“As advised by the IoD, the new disclosure requirements in the Code will relate to diversity policy more generally, not just gender diversity," he said.
"This broad treatment of diversity is a sensible approach from the Financial Reporting Council (FRC). The FRC has also decided, very wisely, to avoid prescribing what a company’s diversity policy should look like.
“However, the FRC is also changing its recommendations on board evaluations, stating that diversity should be considered as part of this process. In the Institute of Direcotr’s view, this addition is not necessary as board diversity must already be considered as part of the work of the nomination committee. The effect of the change is to increase the prescriptiveness of the Code regarding the methodology of board evaluations, which would have been best avoided by the FRC.”
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