The FCA has finalised rules requiring listed firms to report information and disclose targets on the representation of women and ethnic minorities on boards and executive management.
According to the FCA, these rules will make it easier for investors to see the diversity of their senior leadership teams.
If listed companies are unable to hit the positive diversity targets, they will need to explain to the authority why not. This approach, the FCA claims, allows flexibility for smaller firms or those based overseas. The rules also allow firms 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 that start 1 April 2022. The FCA will review the rules in 2025 to ensure they are still working and to check if the diversity targets are still relevant and appropriate.
The comply or explain statement targets are that at least 40% of the board should be women, at least one of the senior board positions – such as chair, CEO, CFO or senior independent director – should be a woman and at least one member of the board should be from an ethnic minority background excluding white ethnic groups.
FCA executive director of markets Sarah Pritchard said, “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.”
Copyright © 2022 RegTech Analyst
Copyright © 2018 RegTech Analyst
