Lord Davies warns UK PLC to speed up women director appointments to avoid quotas: one year review

Culture change happening, but needs to be quicker.

The UK is undergoing a major culture change in appointing women directors but must speed up the rate of change to avoid the government legislating through quotas, according to Lord Davies, who is pushing the UK’s voluntary board gender equality drive. Davies was speaking on the one-year anniversary of his government-backed report, which proposed that FTSE 100 companies should have 25% of women directors by 2015. He said that over the last year the number of women on boards within FTSE 100 companies had risen to 15.6% from 12.5% with 47 new female directors appointed. He said just 11 all-male boards remained among the country’s biggest companies, down from 21 in 2011. A similar rise was recorded within FTSE 250 companies, albeit from a lower starting point. Women now account for 9.6% of all directorships of the index up from 7.8% a year ago. All-male boards are still the norm at 112 companies in the index, but dropped to 44.8% from 52.4% over the year. Davies said: “I believe that we are finally seeing a culture change taking place right at the very heart of British business in relation to how women are seen within the workforce. The Davies has certainly kick-started a serious female recruitment drive. Between 2008 and 2010 – before the Davies enquiry began – the number of women directors had risen by less than a single percentage point rise year-on-year. However, Davies warned that the pace of changed needed to be faster: “I must also emphasise that efforts need to be ramped up and the speed of change accelerated if we’re to avoid Government interference.”A separate study by Cranfield School of Management, the Female FTSE report, published today, says that if the current momentum is maintained a 26.7% female board
representation in FTSE 100 companies would be achieved by 2015, meeting the government’s target for the largest UK companies. Davies recommended that companies outside the FTSE 100 should set their own targets. Vince Cable, UK Secretary of State for Business, said: “This report provides real evidence that business is taking the issue of board diversity seriously and is working to bring about the necessary changes. It demonstrates why we don’t think quotas are necessary at the moment as the UK is making the voluntary approach work.” Earlier this month, the European Commission launched a three-month consultation before it decides on possible regulatory action to increase the number of women on corporate boards. EU Justice Commissioner, Viviane Reding, said a call for voluntary action by companies in March 2011 had only led to a 1.9% increase in female board members, meaning that just one in seven board members at Europe’s top firms is a woman (13.7%). She said that at that rate it would take 40 years to reach a significant gender balance of at least 40% of both sexes. Institutional investors belonging to the 30% Club, a group of chairmen and investors pushing for 30% of women on UK PLC boards, have drafted a letter that they encourage investors to send to companies requesting an official corporate statement on what companies are doing on board diversity.
Link to Cranfield Female FTSE report