Gender Diversity on Boards

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Posted in:HR and Employment|April 3, 2012 | Join the mailing list

Following the recent publication of a European Commission consultation on potential legislative measures, the pressure on UK companies to demonstrate progress in the area of gender diversity on boards has increased.

The publication of a report by Lord Davies in February 2011 caused the issue of gender diversity on boards to hit the headlines.  That report contained a number of recommendations, which were designed to increase the number of female directors on the board
of UK listed companies.  Awareness of the issue has been heightened as a result of the publication of the above-mentioned consultation.

The consultation questions:

• which types of companies should be subject to the measures;

• whether a voluntary approach is effective;

• whether or not targets should be binding, and what sanctions should be implemented for failures to meet those targets; and

• whether the measures should apply to only executive directors, or to only non-executive directors, or to both.

The consultation process will remain open until 28 May 2012 and the European Commission will take a decision on further action later this year.

There is some evidence to indicate that change is occurring in the UK; the above-mentioned report by Lord Davies noted that within the FTSE 100, women now hold 15.6% of all directorships (up from 12.5%) and whereas they were previously 21 all-male boards, that
has now dropped to 11.

Perhaps having regard to the above, the Government is not planning to introduce mandatory quotas for female directors just yet.  For the time being, the plan is to adhere to a voluntary approach and to rely on changes made to the UK Corporate Governance Code,
which requires companies to disclose details of their board diversity policies and objectives for financial years beginning on or after 1 October 2012.

It will be interesting to see whether the ratio of females to males on the boards of major UK companies continues to change.  If the rate of change slows significantly, then expect to see the Government altering its stance and perhaps introducing mandatory
measures.

To discuss how we can provide further advice in connection with these issues, please contact Keith Kennedy, a Partner in our Corporate Team, by email to
keithk@berg.co.uk or alternatively you can call Keith on 0161 833 9211.




The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice.  No responsibility for this article’s accuracy or correctness is assumed by Berg or any of its partners or
employees.  Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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