Final Parker report calls for more directors of colour
Further to the preliminary report on the ethnic diversity of UK Boards published last November, the Parker Review Committee has now issued its final Beyond One by '21 report. The report calls for each FTSE 100 Board to have at least one director of colour by 2021 and each FTSE 250 Board by 2024. Linklaters partner Tom Shropshire is a member of the Committee and Linklaters helped to produce the report.
The report contains updated information and commentary which continues to show that a disproportionately low number of Board positions in FTSE companies are held by directors of colour. The original recommendations for increasing organisational diversity are unchanged, as is the emphasis on a voluntary business-led approach. Mandatory options, such as statutory quotas or mandated short-lists, have been specifically rejected, at this stage. As before, the report also includes useful appendices designed to help companies, including suggestions for key questions for the Board to consider, a list of typical warning signs, a resource toolkit and case studies.
The recommendations target three key areas and are as follows:
Increasing the ethnic diversity of UK Boards
- Each FTSE 100 Board should have at least one director of colour by 2021 and each FTSE 250 Board by 2024.
- Nomination committees of all FTSE 100 and 250 companies should require their human resources teams or search firms to identify and present qualified people of colour to be considered for Board vacancies.
- The principles of the Standard Voluntary Code of Conduct for executive search firms, used for gender-based recruitment, should be extended to apply to the recruitment of minority ethnic candidates as FTSE 100 and 250 Board directors.
Developing candidates for the pipeline and plan for succession
- FTSE 100 and 250 companies should develop mechanisms to identify, develop and promote people of colour within their organisations to build a pipeline of Board capable candidates and make sure management and executives appropriately reflect the importance of diversity to their organisation.
- Led by Board Chairs, existing FTSE 100 and 250 Board directors should mentor and/or sponsor people of colour within their companies to ensure their readiness to assume senior managerial or executive positions internally, or non-executive Board positions externally.
- Companies should encourage and support candidates from diverse backgrounds, including people of colour, to develop their experience and skills by taking on Board roles internally (e.g. on subsidiaries), as well as Board and trustee roles with external organisations (e.g. for trusts and charities).
Enhancing transparency and disclosure
- A description of the Board's policy on diversity should be set out in a company's annual report and should include a description of the company's efforts to increase ethnic diversity within its own organisation, including at Board level.
- Companies that do not meet Board composition recommendations by the relevant date should disclose in their annual report why they have not been able to achieve compliance.
The Parker Review Committee estimates that it should be possible to achieve the overall task before 2021. They intend to update the assessment of the overall progress made at the end of that year.
Click here for a copy of the report.