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End all-white boards by 2021, Britain's biggest businesses are told

Published 02/11/2016

Sir John Parker says diversity in the boardroom makes commercial sense
Sir John Parker says diversity in the boardroom makes commercial sense

Britain's largest listed companies have been told that their executive boards must include at least one person of colour by 2021, after a Government-backed report found "disproportionately" low levels of diversity across UK boardrooms.

The report, chaired by Sir John Parker, has recommended that one director of colour be appointed to each FTSE 100 company by 2021, and to each FTSE 250 board by 2024.

The Parker Review study, dubbed Beyond One 21 and released on Wednesday, said that human resource teams and hired headhunters should be required to find qualified people of colour whenever an executive position needed to be filled.

It added that companies also needed to "identify, develop and promote" people of colour internally through mentors and sponsorships to "build a pipeline of capable candidates".

They should also describe their board diversity policies and outline efforts to reach those targets in their annual reports.

"Companies that do not meet board composition recommendations by the relevant date should disclose in their annual report why they have not been able to achieve compliance," the report said.

Sir John, who is chairman of Anglo-American, characterised ethnic minority representation across the boardrooms of FTSE 100 and 250 firms as "disproportionately low".

The report found that only 8% of the 1,087 director positions in the FTSE 100 were held by directors of colour, while 14% of the total UK population was identified as non-white.

It showed that more than half of FTSE 100 firms were led by all-white executive boards.

Sir John added: "This is not an exercise of tokenism; the recommendations are underpinned by strong industrial logic and the need for UK companies to be competitive in the increasingly challenging global marketplace."

The report explained that there were "key commercial drivers" for ramping up ethnic diversity, which included avoiding "group think" by including a wider range of perspectives and enhancing brand reputation.

Similar recommendations on gender-based recruitment were made by the Davies review last year, saying that women should make up a third of every FTSE 100 boardroom by 2020.

Sir John said: "We believe firmly that UK companies will only achieve their most insightful and effective leadership, and be best prepared to compete in the global economic community, being led by a board of directors that is comprised of both men and women, drawn from an appropriate range of ethnicities, who are capable of appreciating the impact of globalisation and diversity in all its forms across their organisation."

The review is currently accepting comments, with a final report set to be published in 2017.

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