FCA orders boards to explain if diversity targets for women or ethnic minorities are not met
Companies will be forced to explain why they do not have more women or ethnic minorities on their board if they do not meet new targets set by the City watchdog.
Firms’ boards should be at least 40 per cent female, and include one person from an ethnic minority background, according to the Financial Conduct Authority (FCA).
Under new ‘comply or explain’ rules, market listed companies will now have to give reasons if they are falling short.
Targets: Firms’ boards should be at least 40% female, and include one person from an ethnic minority background, according to the Financial Conduct Authority
But as the FCA waded into the trans row, respondents objected to classifying self-identified women as women when meeting their gender diversity goals.
Of the 439 who addressed self-identification, just one favoured grouping people based on their self-identified gender.
Some claimed the FCA’s proposals may breach the Equality Act. Others said men may ‘game the targets’.
And more said that aggregating women and trans women could prevent analysis on either group, that collecting data on self-identified gender could lead to privacy concerns, that trans people should be classified separately due to their ‘different life experiences’, or that it would fail to recognise the structural discrimination faced by women.
The FCA said it disagreed that its proposals would undermine the Equality Act, but accepted that companies may need more flexibility in how they reported gender data.
Phillippa O’Connor, of PwC, said: ‘Firms should use this change as a catalyst to making meaningful progress on diversity and inclusion more broadly.’
Regarding the wider diversity targets, 56 respondents to the FCA’s consultation supported what the watchdog was doing, while 29 opposed it.
Sarah Pritchard, at the FCA, said: ‘Enhancing transparency at board and management level will help hold companies to account and drive progress.’