UK improving in board diversity, report finds

TOP UK companies have made progress towards achieving a greater diversity on their boards, according to a global executive search and leadership consulting firm, writes Chandrashekar Bhat.

A study by Spencer Stuart showed that the proportion of first-time board directors from minority ethnic backgrounds rose to 25 per cent in the top 150 companies last year.

While this was “encouraging”, the study showed there was still “a long way to go in the search for greater diversity on boards”, the firm said in its latest report.

According to its findings, 61 per cent of FTSE 100 companies had at least one board director from a minority ethnic background, while 21 per cent of companies had two or more minority ethnic directors.

Some 11 per cent of all board directors identified themselves as minority ethnic, whereas one board chair and six senior independent directors said they belonged to the group.

Titled the UK Spencer Stuart Board Index, the study showed that 32 per cent of ethnic minority directors have a financial services background, and 36 per cent of all minority ethnic directors have held either a CEO or CFO position.

The report also suggests that top companies have taken big strides in achieving gender diversity at senior non-executive levels. It said 51 per cent of non-executive directors are now women for the first time.

“This is the first year that women have overtaken men to form the majority of non-executives on the top 150 boards,” the report said.

Women make up 36 per cent of all directors, including chairs and executive directors, and this is up from 24 per cent in 2016 and 12 per cent in 2011.

However, the progress in diversity is not encouraging in the United States, going by the firm’s S&P 500 Board Diversity report.

While the representation of some demographic groups on S&P 500 boards more closely reflects the US population, there is a significant disparity in representation for others.

Some 42 per cent of the American population is non-white, which is double their representation among all S&P 500 directors (21 per cent), the report found.

The largest disparity is between Hispanic representation on boards (five per cent of all directors) against their population of 18.5 per cent in the US.

However, Asians account for five per cent of such boards against their population of 5.9 per cent.

“The racial justice reckoning of the past year highlighted the lack of progress companies have made in increasing ethnic and racial representation on boards and in executive ranks,” the report said.