UK to make FTSE 100 companies publish ‘measurable’ progress on hiring women directors

UK listed companies will be legally obliged to report on their efforts to appoint more female directors from October next year. The Financial Reporting Council (FRC), the UK governance watchdog, announced the mandatory requirement after moves by the government to put the issue squarely on the corporate governance agenda. The FRC will require companies to report annually on “measurable objectives” that the board has set for implementing its gender policy, and on progress made. It said the UK Corporate Governance Code would be updated so that board diversity, including gender, is one of the factors considered when evaluating board effectiveness. A government-commissioned report earlier this year by former Standard Chartered Chairman, Lord Davies, called for boards to announce their “aspirational gender diversity targets” by September 2011. However, the FRC has delayed the implementation to October 1, 2012. Davies recommended that FTSE100 listed companies should be aiming for a minimum of 25% female board member representation by 2015, but stopped short of advocating strict quotas. Investors responding to the consultation had urged the earliest possible introduction of the changes. Aviva Investors said it considered any delay in making voluntary progress on gender diversity might “unnecessarily strengthen” the push from some areas of the EU for gender quotas on boards.Michele Edkins, Global Head of Corporate Governance at BlackRock said in the firm’s submission that companies should already have anticipated a disclosure requirement by 2012, given the high profile public debate in the UK and Europe”. The Co-operative Asset Management (TCAM) advised the FRC that it would alter its voting directions with effect from October 2011: “Investee companies who hold their AGMs after this date will be assessed as to whether they have made a public statement of aspirational levels of women on their boards, as per Lord Davies’ recommendations,” said TCAM’s Abigail Herron. The Local Authority Pension Fund Forum said the “current glacial pace of progress” suggests existing directors fill board vacancies with individuals in their own image. The FRC said the “formal implementation” of the changes was being deferred because it believes it is unhelpful to companies and investors for the Code to be amended when it is already the intention to consult on further changes. “ The 2012 start coincides with proposed regulations requiring companies to disclose information about the percentage of women at different levels of the organisation. Sky News has reported that UK Prime Minister David Cameron is to personally write to those FTSE-350 companies which have also not yet set out plans for increasing the number of senior women.