The U.K. Financial Conduct Authority will consider ways to give investors more transparency into the diversity of public company boards and executive management teams, the regulator said Wednesday.
An FCA news release said it is considering requiring public companies to publish annual statements on whether they have achieved certain proposed targets for gender and ethnic minority representation on their boards, and to disclose data on the gender and ethnic makeup of their board and most senior level of management.
For the annual "comply or explain" statements, the proposed company targets are:
- At least 40% women on boards.
- At least one woman in a senior board position such as chairwoman, CEO, CFO, or senior independent director.
- At least one board member from a non-white ethnic minority background, as defined by the Office for National Statistics.
The FCA is also proposing that companies ensure that existing disclosure on diversity policies includes key board committees for audit, remuneration and nominations, which would be subject to the same targets proposed.
The scope of the proposals includes U.K. and overseas companies with equity shares or certificates on the FCA's Official List in the U.K., or those considering admission to such listings.
The changes would build on various initiatives in the U.K. and internationally to improve corporate board diversity, and on ideas raised in an FCA discussion paper published July 7.
The FCA will take input on the proposals until Oct. 22 and issue rules by the end of the year.
Clare Cole, FCA director of market oversight, said in the news release that with growing investor interest in board diversity, the increased transparency resulting from new rules "will provide better data for companies and investors to assess progress in these areas and make investment decisions, reduce investor search costs, and inform shareholder engagement, enhancing market integrity."
"Over time, we expect enhanced transparency may strengthen incentives for companies towards greater diversity on their boards and encourage a more strategic approach to diversity in their pipeline of talent," Ms. Cole said. "This may have broader benefits in terms of the quality of corporate governance and company performance in due course."