By Maximilian Clarke
Six months ago Lord Davies’ launched a report into diversifying the UK's boardrooms. A host of measures were proposed to increase diversity, though it stopped short of implementing mandatory quotas as seen in Spain. This proved popular with the business world:
“I am not in favour of quotas as a way of recruiting talent, but I do believe that action needs to be taken if we are to see more women operating at senior levels within business. The time has come for companies to promote the boardroom, and the benefits which go with it — they need to become attractive places for women to work,” said Chris Park, CEO, Talking Talent.
Yesterday saw the Financial Reporting Council publish amendments to their UK Governance Code, recommending a ‘comply or explain’ policy in which companies would make public their boardroom compositions before being given a chance to explain any imbalances.
Speaking on the 6th month anniversary of Davies Women on Boards report, Helen Wells, Director of the Opportunity Now gender campaign, discusses recent developments as well as the benefits to businesses resulting from more equal boards:
“Opportunity Now supports the recommendations of the Lord Davies report. The move towards setting aspirational goals for the number of women on corporate boards is gathering pace. Those FTSE 100 and FSE 250 companies who have not yet published their goals should do so, or risk being left behind in the race for talent.
“Increasing diversity in the boardroom should be seen as a strategy that delivers commercial advantage. It encourages new ideas and vigorous challenge, helping boards to approach risk in a more robust manner. And it allows boards to escape the herd mentality of group-think. We desperately need all these strengths if we are to recover our global competitiveness.
“Numerous studies in both the US and Europe have found that companies with the highest proportion of women in their top management teams experience significantly higher returns on equity and total return to shareholders than those with the lowest. A study in Canada showed that boards with two or more women consistently surpassed all-male boards on accountability practices, review of non-financial performance and assuming responsibilities recommended by the Stock Exchange.
“Figures released today show that 22.5% of new board appointments since February 2011 have been women. If we are to reach the goals set by Lord Davies this figure must reach one third.
“Companies must make their own plans on how to increase the number of women on their boards based on their own starting points and anticipated board turnover. A company with an all male board could plan to have two women by 2015, a company with a board that is currently a quarter women must aim higher.
“Opportunity Now will continue to work with our member companies to drive forward the campaign for balanced boards.
“I welcome the decision of the Financial Reporting Council yesterday to amend the UK Corporate Governance code so that all listed companies will in future report on their diversity policy and on progress towards any measurable objectives they choose to set. We hope that this significant change will drive forward the pace of change on women on boards.”
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