Parker Review Committee Report
The Parker Review Committee, led by Sir John Parker, published its Final Report on 12 October in which it urges business leaders to improve the ethnic and cultural diversity of UK Boards to better reflect their employee base and the communities they serve.
The report sets out achievable objectives and timescales to encourage greater diversity, and provides practical tools to support Board members of UK companies to address the issue.
Key Recommendations
1. Increasing the ethnic diversity of UK Boards
- Members of the FTSE 100 and FTSE 250 should develop mechanisms to identify, develop and promote diversity within their organisations in order to ensure over time that there is a pipeline of Board capable candidates and their managerial and executive ranks appropriately reflect the importance of diversity to their organisation.
- Nomination committees of all FTSE 100 and FTSE 250 companies should require their human resources teams or search firms to identify and present qualified ethnic diversity to be considered for Board appointment when vacancies occur.
2. Developing candidates for the pipeline and plan for succession
- Members of the FTSE 100 and FTSE 250 should develop mechanisms to identify, develop and promote ethnic diversity within their organisations in order to ensure over time that there is a pipeline of Board capable candidates.
- Led by Board Chairs, existing Board directors of the FTSE 100 and FTSE 250 should mentor and/or sponsor people of colour within their own 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 drawn from diverse backgrounds, including people of colour, to take on Board roles internally (e.g., subsidiaries) where appropriate, as well as Board and trustee roles with external organisations (e.g., educational trusts, charities and other not-for-profit roles). These opportunities will give experience and develop oversight, leadership and stewardship skills.
3. Enhancing transparency and disclosure
- A description of the Board’s policy on diversity be set out in a company’s annual report, and this should include a description of the company’s efforts to increase, amongst other things, ethnic diversity within its 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.
Over half of FTSE 100 have no ethnic minorities on their Boards
As at the end of July 2017, only 85 of the 1,050 director positions in the FTSE 100 are held by people from ethnic minorities. In fact, only 2% of director positions are held by people from ethnic minorities who are UK citizens, despite this group making up 14% of the total UK population (up from 2% in 1971). 51 companies of the FTSE 100 do not have any ethnic minorities on their Boards.
The Steering Committee will continue to track the progress made against the recommendations on an annual basis.
Sir John Parker, Chairman of the Parker Review Committee, commented:
Today’s FTSE 100 and 250 Boards do not reflect the society we live in, nor do they reflect the international markets in which they operate. Whilst we are making good progress on gender diversity in the Boardroom, we still have much to do when it comes to ethnic and cultural diversity.
Our report has identified clear commercial benefits in addressing this issue, and it is crucial to make progress in this area if we want Britain to continue to be at the forefront of global business. We also outline some business-friendly recommendations, which aim to not only increase the ethnic diversity of Boards in the near term but also develop a strong pipeline of candidates for the future. These recommendations received overwhelmingly positive feedback and we have now provided some practical tools to help Boards implement them.
I look forward to seeing a change in the Boardroom as we continue to track progress in the coming years.”
