FCA finalises new diversity disclosure rules for companies
But CII calls for more work to be done including 'dedicated constructive planning and affirmative action'
The Financial Conduct Authority (FCA) has finalised new rules requiring listed companies in the UK to report information and disclose any targets they have set on the representation of women and ethnic minorities on their boards and executive management.
The new rules will make it easier for investors to see the diversity of company senior leadership teams, the UK conduct regulator said.
The FCA said its approach sets positive diversity targets for listed companies. Companies that cannot meet them will need to explain why.
This approach allows flexibility for smaller firms or those based overseas, the regulator said. The rules also allow companies to decide how best to collect data from employees to show they are meeting the targets.
The rules will apply to listed companies for financial accounting periods starting from April 1, 2022. The FCA will review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.
“As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress,” Sarah Pritchard, executive director of markets at the FCA, said.
The Chartered Insurance Institute (CII) welcomed the FCA’s policy statement but said further work is needed, including "dedicated constructive planning and affirmative action to get to where we collectively feel we should be heading for the benefit of all".
The CII said it actively measures the diversity of its board and executive committee with identified actions and has long maintained the key to innovation and success is found in properly accessing the diversity of ideas found within the full breadth of society.
“It is important to accept and understand that when our talent pool is limited, we are in fact limiting ourselves as an organisation, and therefore limiting the benefits we can bring to those we serve,” a spokesperson for the CII said. “Addressing diversity and inclusion should be one of the highest priorities within the profession if we are to dismantle any unjust barriers that prevent people from accessing careers in insurance.
“Senior leaders need to understand where the barriers are that hinder the progress of talented people from all backgrounds from moving up the career ladder.”