UK: Board diversity - change to UK Corporate Governance Code

The FRC has announced two changes to the UK Corporate Governance Code applying to financial years beginning on or after 1 October 2012 (although companies are encouraged to apply them immediately).  The changes require listed companies to (i) report annually on their boardroom diversity policy, including gender, and on any measurable objectives that the board has set for implementing the policy and the progress it has made in achieving the objectives, and (ii) consider the diversity of the board, including gender, when evaluating board effectiveness.

The 1 October 2012 implementation date also ties in with the implementation date proposed by the Government for its new narrative reporting regulations, which are proposed to include a requirement for companies to make disclosures about the percentage of women at different levels of their organisations (see corporate e-bulletin 2011/26 for more details on the BIS narrative reporting proposals).

Meanwhile, Cranfield University has published a report on the progress made over the past six months on certain of the recommendations contained in the Davies Report.  This recommended that, by September 2011, chairmen of FTSE 350 companies should announce the number of women they aim to have on their boards by 2013 and 2015.

The Cranfield report's key finding was that only 33% of FTSE 100 companies and 17 of the FTSE 250 companies have announced targets. Of the 33 FTSE 100 companies which have stated a target, only 11 have set a target to increase the proportion of women on their boards by more than 10%. It also notes that since the Davies Report was published, there have been 21 new female board appointments for the FTSE 100, representing 22.5% of the total number of appointments.