Governance

About half of FTSE 350 firms now have BAME directors

Published on: 31 December 2021 07:35 AM
by KnowESG
The increase in representation comes as firms race to meet voluntary deadlines to appoint at least one BAME director to their boards before the end of 2021.
The increase in representation comes as firms race to meet voluntary deadlines to appoint at least one BAME director to their boards before the end of 2021.

A Brief Summary

As companies face increased pressure on diversity in leadership roles, The number of FTSE 350 companies with a director of colour has jumped 108% in the past year. The increase means that companies now have more Black, Asian or ethnic minority(BAME) directors on board.

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The number of FTSE 350 firms with a director of colour has climbed by 108 percent in the last year, as corporations face growing pressure to improve diversity across senior leadership roles.

123 of the largest public corporations now have a black, Asian, or minority ethnic director (BAME) on the board, up from 59 last year. It makes up almost half of the FTSE 350, accounting for 45 percent of the index.

The motives for greater board and leadership diversity, including pressure from politicians and regulators, appear to be irresistible.  Evidence shows that organizations with broader product and service offers are more profitable and, as a result, give higher long-term returns to shareholders.

Companies are racing to fulfill voluntary deadlines to add at least one BAME director to their boards as part of the government-backed Parker review, which examines racial diversity across stock market-listed enterprises.

According to the review, which began in 2017, FTSE 100 businesses have until the end of 2021 to appoint at least one BAME board-level director. A similar aim was set for the FTSE 250 companies, but with a 2024 deadline.

It also aligns with the UK regulator's intentions to have listed companies either satisfy racial and gender representation requirements on their boards of directors or explain why they are falling behind.

The proposals, which would necessitate modifications to the UK's listing, disclosure, and transparency rules, would also force publicly traded companies to provide information on their board of directors' gender and ethnic composition, as well as senior executive responsibilities. With a total of 402 directorships, women now occupy 39 percent of all directorships throughout the FTSE 100, up from 35 percent last year.

46 companies now have boards with at least 40% female representation, up from 31 in 2020 and only 25 in 2001, suggesting "significant progress" toward gender parity on corporate boards. Only 14% of executive positions in the UK's 100 largest publicly traded corporations were held by women, showing a huge gender disparity. FTSE 350 companies are making substantial progress in diversifying their board of directors. However, there is still work to be done.

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