Firms criticised for failing to improve diversity

By Nadeem Badshah

BRITAIN'S biggest companies have been slammed for their "painfully slow" progress in meeting targets for ethnic minority directors.

Ahead of the 2021 deadline, only 53 of UK's largest listed firms on the London Stock Exchange have at least one director from a BAME background.

The figures, published in February, are a small increase from the 49 companies that met the target since the Parker review on diversity was launched in 2017.

The review gave FTSE 100 firms four years to appoint at least one non-white board-level director. The same target was set for the FTSE 250 with a deadline of 2024 - with only 54 firms reaching the goal so far.

Pinky Lilani CBE, founder of the Women of the Future Programme, told Eastern Eye: "I think it is quite unacceptable that progress is painfully slow.

"I know from the work we do that  there so many talented ethnic minority women but they need champions to open doors for them and more robust networks that give them access."

Among the FTSE 100 companies that were found to have failed to take steps to improve diversity are mining firm Glencore, wealth management firm St James’s Place and housebuilders Taylor Wimpey and Persimmon.

The Parker review also found that few firms have set clear targets for the ethnic make-up of their board with just 14 per cent of the FTSE 100 and two per cent of FTSE 250 firms doing so.

Professor Sunitha Narendran, director of the University of Roehampton Business School, said the findings are disheartening since the new trends in corporate governance are about creating and sustaining diversity.

She told Eastern Eye: "I would have imagined that companies would have fully understood the benefits and skill sets that gender, racial, and ethnic diversity could bring to boardroom discussions.

"I also believed that companies are responding to the upsurge in pressure from the market, investors, activists, and the government for more diversity in board composition.

“There is of course plenty of research evidence to demonstrate the positive impact of diverse of board composition.

"For example, large companies with women on their boards have outperformed businesses with all-male boards. Companies with diverse boards also seem to have fewer instances of unethical business practices as well better oversight of financial performance."

The Parker review update relied on voluntary disclosure from companies to report on their progress.

Just 30 of FTSE 100 firms confirmed they had not met their targets, while a further 13 failed to provide clear information about their board’s ethnic composition. Four of the UK’s largest listed companies, including JD Sports, did not respond to requests for data.

Paresh Raja, CEO of Market Financial Solutions, said the statistics paint an ugly picture and called for more investment in education, apprenticeships and internships.

He added: “Around a fifth of the UK population is non-white. There is a huge pool of potential talent that could rise up to become directors of large businesses, but this talent is evidently not being nurtured or given the necessary pathways to reach the top level.

"The same is true when you look at entrepreneurship and startups –  a mere five per cent of the UK’s small businesses are ethnic minority-led. So, the finger of blame cannot be pointed solely at FTSE firms.

“As a society we must do more to ensure there are equal opportunities for ethnic minorities, which includes investing heavily into regions where such minorities are often clustered."

The latest figures have led to The Financial Reporting Council urging companies to ramp up statistics on diversity in annual reports, branding Britain's record on boardroom ethnicity "poor".

Ritam Gandhi is director of digital firm Studio Graphene.

He said: “This failure to act means talented people are being excluded from leadership positions simply because the opportunities and avenues for progression are not presenting themselves.

"So whether it’s by introducing mandatory minority representation quotas, or enforcing sanctions for those with inadequate representation, the pressure is now on UK businesses to set a new gold standard for diversity in business.

“Rather than treating diversity as a tick-box exercise, however, and making bold promises that fail to translate into achievable policies, I want to see companies take a bolder approach and create more seats at the table on their boards for those from ethnic minority backgrounds."

Meanwhile, a third of all board positions in FTSE 100 companies are now held by women, meeting a key target of the government-backed Hampton-Alexander Review.

Some 33 per cent board members are female, up from 12.5 per cent less than a decade ago. But only 15 per cent of FTSE 100 finance directors are women.

Business secretary Andrea Leadsom said: “The Hampton-Alexander Review has done fantastic work. But it’s clear that women continue to face barriers to success, whether that’s through promotion to key roles or how they are treated by colleagues.

“Businesses must do more to tackle these issues and we will support them in doing so, including through our world leading reforms to workplace rights.”