Katherine Griffiths, Bloomberg, April 20, 2022
The Financial Conduct Authority has set U.K.-listed companies three diversity targets, including a goal for at least 40% women on their boards, in the latest move to bolster diversity in the upper ranks of British business.
Companies should also have at least one woman in the role of chief executive officer, chief financial officer or senior independent director, the FCA said in a statement Wednesday. The regulator also said that at least one member of the board should be from an ethnic minority background, excluding white ethnic groups.
A spokesperson for the FCA said the regulator will give firms the flexibility to decide how they define “women” and whether the term includes trans women. It will review the situation again in three years and decide whether further steps are needed to promote diversity and inclusion.
Companies that fail to comply may fail to attract investment from institutional funds, according to Delphine Currie, a partner at law firm Reed Smith.
The watchdog said firms should publish the information in their annual financial reports, and if they do not meet the targets will be required to explain why. The rules will apply for accounting periods starting from April 1, 2022, meaning they will start to appear in reports from the second quarter of next year.