CBI BACKS CHANGES TO CORPORATE GOVERNANCE CODE TO BOOST BOARDROOM DIVERSITY

CBI BACKS CHANGES TO CORPORATE GOVERNANCE CODE TO BOOST BOARDROOM DIVERSITY

The CBI today urged the Financial Reporting Council to get on with making changes to the UK’s Corporate Governance Code to boost the number of women on boards.

Responding to the FRC’s consultation document: Gender Diversity on Boards, the UK’s leading business group reiterated its call for the Code to be revised to require listed companies to report on diversity on a “comply or explain” basis.

This approach would allow firms to set their own targets for increasing diversity that reflect the nature of their business and circumstances and explain why if they fail to deliver. In practice, that would mean a company employing a large number of female staff may choose to set a higher target, but the same target may not be realistic for a firm with fewer women employees.

Katja Hall, CBI Chief Policy Director, said:

“The best way to get more women on boards is by giving companies the flexibility to set targets that reflect the realities of their businesses.  

“The voluntary approach is working with the number of female boardroom appointments steadily increasing since the beginning year, but we need to keep up the momentum.

“Given the scale of the challenge, the FRC should get on with revising the Code as a matter of urgency. Failure to act now could put firms at risk of Government or EU-imposed quotas, which would be little more than tokenism.”

In its response to the FRC consultation, the CBI highlights the strong business case for increasing boardroom diversity, including: promoting good governance and challenging group mentality; helping companies get the best people for the job by using the most diverse selection pool and providing a better reflection of a firm’s customer base.

Last December the CBI published its recommendations for improving boardroom diversity in a report Room at the Top. Among the CBI’s proposals are: 

·         Harnessing the influence of the chairman.  As well as setting the tone and culture of the board, the chairman should act as a mentor and advocate to female board candidates. The chairman’s role should also include encouraging women to take up non-executive directorship roles externally and shaping wider human resources policy at the company to support the female talent pipeline.

·         Improving transparency in board-level appointments, including requesting a diverse list of candidates from search consultants and considering skills acquired in non-linear career paths or less traditional roles.

·         Developing and sustaining the talent pipeline through to the boardroom, including ensuring women can see the path through operational and profit centre management roles; guiding employees on career choices and making the management of all talent a priority. This should go alongside the existing good practice of supporting women at natural break points in their careers, including returning from maternity leave; implementing flexible working policies; encouraging mentoring schemes and networking opportunities.