Yesterday Lord Davies published his independent review into women on boards. In a press release he said as a result of this report, which was commissioned by Business Secretary Vince Cable in August last year, we need a radical change in the boardrooms in Britain and a radical change of culture.
Maybe not surprisingly he has not advocated the use of quotas but instead has placed the onus on business to reform their boards by 2015 or face government measures. He has recommended that UK listed companies in the FTSE 100 should be aiming for a minimum of 25 per cent female board members by 2015 and that FTSE 350 companies should be setting their own challenging targets.
Lord Davies also calls on Chairmen to announce these goals in the next six months and Chief Executives to review the percentage of women they aim to have on their Executive Committees in 2013 and 2015. He calls for a ‘comply or explain’ approach whereby companies should publish their own targets and comply with them or explain to shareholders why they have not done so.
The recommendations are not onerous and do not seem unachievable, in fact it only represents a further 135 women board members in the top 100 companies.
Concern is raised over the flawed system of appointment of non executive directors and the panel call for more transparency in the appointment process.
In summary the main recommendations of the report include:
- All FTSE 100 companies should have a minimum of 25% women on boards by 2015
- All FTSE 350 companies need to set out their targets for the number of females on their board by 2013 and 2015
- Companies should be expected to report on the proportion of women on their boards, women in senior positions and female employees in the whole organisation
- The UK Corporate Governance code should be amended to require companies to establish a policy of boardroom diversity
- Chairmen should disclose meaningful information in their annual report about their firms' appointment processes and how they address diversity including a description of the search and nominations process
- Executive search firms should draw up a voluntary code of conduct addressing gender diversity and best practice relating to FTSE350 board level appointments.
Gender diversity is beneficial for business so there is an overwhelming business case for these recommendations but the Chairmen and Chief Executives of UK companies need to take action, supported by others in the corporate world, including investors and executive search firms.