Most FTSE 100 firms have now appointed an ethnic minority board member to meet government targets, yet the recent Parker Review update found they are mostly in non-executive director roles (NEDs), ESG Clarity sister title DiversityQ reports.
Ethnic minorities are mainly in NED roles, holding limited scope of influence over their organisation. Only six CEOs across the FTSE 100 are from an ethnic minority background, while it’s slightly better at 16 in the FTSE 250. Ethnic minority representation among chairs is even worse, with only three in the FTSE 100 and five in the FTSE 250. In FTSE 100 firms, only nine ethnic minority individuals occupy the position of CFO, while four are “other executive directors,” with the remaining positions being NEDs.
Yet, firms have improved ethnic diversity at the boardroom level generally; by late 2021, 89 out of 100 FTSE 100 firms had a minority ethnic director on their boards, which is up from around 74 in November 2020 and a jump from five years ago, when only half had non-white individuals in their boardrooms.
The report update read: “We are pleased to announce that our December 2021 target of every FTSE 100 company having at least one person from a minority ethnic group on its board has nearly been met. We have largely reached our goal of ‘At Least One by ‘21’. We can expect that 94% of companies will be complying with the target by May 2022 — two months from now.”
See also: – Parker Review survey finds progress on ethnic minority representation
While this is good news for more diverse boardrooms generally, firms must tackle the low representation of ethnic minorities in the most influential boardroom roles within the nation’s largest and most successful businesses. Their limited progress indicates that ethnic boardroom diversity is still in its formative stages – and far from actual inclusion. Moreover, these firms risk being seen as supporting performative diversity if they are only appointing ethnic minorities to certain boardroom positions.
The updated report suggests that ethnic minorities in NED roles could help further the appointment of more ethnic minorities to executive boardroom positions: “We recommend that continued attention is focused on this issue and believe that this — together with the growing experience of many recently appointed minority ethnic NEDs — will help generate growth in the number of directors from minority ethnic groups in the most influential roles around the boardroom table. This is what has happened with women directors in recent years and we anticipate a similar trend with minority ethnic directors.”
See also: – Appointing women NEDs at finance firms won’t solve gender pay gap
What the updated review proves is that increasing boardroom diversity along ethnic lines, like with any other form of diversity and inclusion, is never finished but should be a continual work in progress for businesses. This is echoed by David Tyler, co-chair of the Parker Review Committee, who said: “Companies should not think of the Parker Review targets as ‘one and done’. We hope companies will follow the most diverse of their peer group and expand the scale and depth of initiatives fostering inclusion and diversity right through organisations to help develop the next generation of talent.”
Andrew Ninian, director, stewardship and corporate governance at the Investment Association, added: “Diversity needs to be embedded throughout senior leadership teams, and we encourage leaders at all FTSE companies to continue to consider how they can best create a culture of diversity and inclusivity at all levels in their organisations.
“While commendable progress has already been made at FTSE 250 companies, we urge the remaining boards to take the steps necessary to diversify their composition, and meet their target by 2024.”
Peter Swabey, FCG policy and research director at The Chartered Governance Institute for England and Ireland (CGIUKI) commended the work of FTSE 100 firms but added they should take more proactive steps to develop board-ready candidates from ethnic minority backgrounds: “We welcome the latest update of the Parker Review, showing the original target set by the review committee has nearly been met, with only three FTSE 100 companies that do not now have at least one director from an ethnic minority background on their board.
“However, as we have said with gender diversity, the issue remains in the executive pipeline, and it is disappointing to see so few executive directors from ethnic minorities. Companies should develop a diverse pipeline of board-ready candidates and include them in future succession planning. They should also seek to enhance transparency and disclosure of their records and track progress against their diversity objectives.”
To read the Parker Review update in full, click here.
