The right direction for ethnic board diversity

The Parker Review published its annual report this week, with encouraging progress on boardroom diversity for ethnic minorities, but recognising that there is still more work to be done to improve ethnic minority representation at a senior management level. 

The core target set by the review is for FTSE250 companies to have at least one minority ethnic director on their boards by December 2024, and for the UK’s 50 largest private companies to meet the same target by the end of 2027.

Key findings from this year’s report include: 

  • 96% of the FTSE100 met the target of at least one minority ethnic director on their boards.
  • Whilst 70% of the FTSE250 also met the target, the UK’s largest private companies lagged behind at just 44%. 
  • Across the FTSE100, ethnic minorities now hold 19% of all director positions. Across the FTSE250, ethnic minority director positions are held by 13.5%.
  • The FTSE100 now has 12 ethnic minority chief executives (up from seven the previous year) and seven Chairs (up from six in 2022).
  • Only 13% of senior management of FTSE100 firms were ethnically diverse, with 12% across the FTSE250, showing a much lower reflection of minority ethnic diversity below board level across the broader FTSE250.

The review is encouraged by the progress made in recent years but believes the top two reasons holding leaders back in making further progress towards race equity are “the fear of making inappropriate statements” and “the fear of being labelled racist”.

In March 2023, the scope of the review was extended to focus separately on senior management and executive teams, asking companies to set and achieve targets for ethnic diversity at senior management level. Senior management is defined as those in the company’s executive committee or equivalent, and those senior managers reporting directly to them. Whilst the latest review has found considerable change within the UK’s top 250 companies compared to the review’s launch back in 2015, the prevalent message by the review is that boardrooms still need more ethnic diversity and in particular, more needs to be done to create more diverse senior management. 

The report was published two weeks’ following the latest report by the FTSE Women Leaders Review, which focused on the representation of women on the boards and leadership teams of the UK’s largest companies. Like the Parker Review findings, the FTSE Women Leaders Review also painted a positive overall picture for progress in achieving boardroom diversity but found little change to the number of female CEOs. 

The focus over the next few years will clearly be on improving diversity across the senior leadership population. But achieving progress on diversity for this level brings nuanced challenges, including the tenure of these roles compared to board positions, and the availability of diverse talent coming through the ranks. 

You can access the Parker Review report here. You can also read our commentary about the progress of boardroom diversity for female members in our blog post here