LONDON — Britain’s monetary watchdog has proposed altering the foundations for firms listed on the U.Okay. inventory market to embrace a “comply or explain” requirement for not assembly diversity targets.
The U.Okay.’s Monetary Conduct Authority put ahead its proposals on diversity and inclusion in a session paper revealed Wednesday.
It proposed that not less than 40% of firm boards ought to consist of ladies, together with those that self-identify as a lady. As of January 2021, ladies accounted for 36% of firm board positions on the U.Okay.’s major FTSE 100, in accordance to information from the Hampton Alexander review.
As well as, the FCA mentioned firms ought to have not less than one lady holding the senior board positions of chair, CEO, senior unbiased director or chief monetary officer.
The FCA additionally proposed that not less than one member of an organization’s board be from a non-White ethnic minority background. A report by Inexperienced Park Enterprise Leaders, revealed in February, discovered that simply 10 of the 297 individuals within the high three roles of FTSE 100 firms had ethnic minority backgrounds.
The monetary regulator mentioned it wished listed firms to publicly disclose whether or not they had met particular board diversity targets of their annual monetary statements. If not, firms would have to clarify why they’d failed to meet these targets, often known as a “comply or explain” requirement.
“This allows companies flexibility to provide relevant context on their approach to board diversity, whether or not these targets are met,” the FCA mentioned in its paper.
Together with these targets, the FCA mentioned it wished corporations to publish information on the composition of their boards and probably the most senior members of govt administration groups.
Nasdaq diversity proposal
The FCA’s proposals observe a push by U.S. exchange operator Nasdaq to increase diversity among the 3,000 companies listed on its stock exchange.
It filed a proposal in December asking the Securities and Exchange Commission to approve new rules on the make-up of company boards. The Nasdaq proposed requiring the majority of companies to have at least two diverse board directors: one woman and one person who identifies as either an underrepresented minority or LGBTQ. It also put forward a “comply or explain” requirement.
As of March, however, the Nasdaq’s proposal had been delayed as the SEC took more time to review the plan.
Speaking in March at the launch of a charter on women in finance, FCA CEO Nikhil Rathi said that the Nasdaq had taken the lead with its listing rules and said the U.K. watchdog was exploring similar requirements.
He said: “I would encourage all capital markets participants to consider the reasons why there are so few female CEOs and CFOs or CEOs and CFOs of color presenting during IPOs or when capital is being raised — are there challenges in the culture of private equity, underwriting, equity syndication? What more can we do to sponsor and celebrate female business leaders and entrepreneurs?”
The FCA is asking for feedback on its proposals, as part of its consultation period, which closes in October. It said it would seek to make any rules formal by late 2021.
