Listed companies are largely ignoring rules to give investors a breakdown of the diversity in their boardrooms, research from the Financial Reporting Council has warned.
An investigation conducted by the University of Exeter Business School for the UK’s FRC found that just 15% of companies complied with the UK Corporate Governance Code on diversity reporting, with just over three months to go until the new code takes effect on 1 January 2019.
From January, UK companies will be obliged to offer more detailed reports on diversity, outlining corporate objectives and initiatives and detailing the nomination process for boardroom candidates. It also has more specific requirements around succession planning.
However, the research found that investors are receiving insufficient detail from FTSE 350 companies on diversity, with companies largely treating reporting in the area as a compliance exercise. Despite this, 98% of FTSE 100 and 88% of FTSE 250 companies claim to have a policy on board diversity.
Professor Ruth Sealy, associate professor at the University of Exeter, said the research shows that many organisations “appear to still have a minimalist ‘tick box’ approach and need clearer strategies to drive greater diversity at senior management levels.”
Tracy Vegro, executive director of Strategy and Resources at the FRC agreed, describing some of the findings of the report as “disappointing.”
She said: “We expected to see more of our largest companies providing greater information about their approach to boardroom diversity and insights on the actions they are taking to increase diversity at all levels, particularly those in the current UK Corporate Governance Code.
“To maintain a competitive edge and success over the long-term, UK companies need to consider how diversity and inclusion is relevant to the markets in which they operate, all their stakeholders and the communities they serve.”