Nearly all of the UK’s biggest listed companies have at least one minority ethnic director on their boards, more than doubling the amount without all-white boardrooms in six years, according to a Government-backed review.
The Parker Review, which was established in 2017 to help improve diversity across the UK’s biggest corporations, found that 96 of the companies listed on the FTSE 100 had an ethnic minority director on their boards at the end of 2022.
It compares with just 47 firms who did in 2016, when the majority had an all-white board.
David Tyler, who helped start the review and took over from Sir John Parker as chairman last year, said he was pleased with the progress that had been made.
We have made more progress in the UK than most of those countries have through mandatory targetsDavid Tyler, chair of the Parker Review
Mr Tyler told the PA news agency: “There are wonderful role models now, at the top of companies, who can be seen by younger managers and executives.
“They can now see someone with a black face or a brown face on the board and that gives them a feel that they can succeed.
“I think it’s really important, but it’s not enough.”
He said that the review has decided to set new targets for senior management positions among FTSE 350 firms, so that equal access can begin to be felt at all levels of a business beyond the most senior roles.
Some 18% of all FTSE 100 director positions are held by people from a minority ethnic group, the review found, and 10% of chair and executive director positions.
It means that there is a growing proportion of people from ethnic minorities in “very influential” positions, the report said.
Nevertheless, four big companies that did not meet the targets and retained all-white boards at the end of 2022 were retail giant Frasers Group, student accommodation manager Unite Group, investment firm F&C Investment Trust, and home repairs business HomeServe.
The Parker review works by setting a series of voluntary targets for FTSE 350 companies to meet, and dates by which they should be achieved.
Mr Tyler stressed that setting voluntary targets for both ethnic and gender diversity has proven to be more successful than making the targets mandatory.
“Most countries in Europe, particularly when it comes to gender, have mandatory requirements to have a certain percentage of women on their boards,” he explained.
“We have made more progress in the UK than most of those countries have through mandatory targets.
“And I think this approach is working well, and I’m not aware of anywhere else in Europe where there are targets for ethnic minorities.
“I hope that it is a model that other countries might want to follow in future.”
Evidence shows that diverse teams that are inclusively led will outperform those that are homogenous – so it’s essential that companies are overseen by boards that are diverseLaura Sanderson, Russell Reynolds Associates
He added that, unlike with gender equity targets, it is more difficult to have a “one size fits all” approach for ethnic diversity because different regions have very different balances of ethnic minorities in their communities.
For example, in London ethnic minorities make up about 46% of the population, compared with just 7% in the north east of England, based on latest census data in the UK.
“We are asking companies to come up with an appropriate target for their business, and give us the data year-by-year with how they’re getting on with achieving it,” Mr Tyler told PA.
Laura Sanderson, a consultant at Russell Reynolds Associates, said: “Evidence shows that diverse teams that are inclusively led will outperform those that are homogenous – so it’s essential that companies are overseen by boards that are diverse.
“It’s encouraging to see the progress from FTSE companies so far in further increasing ethnic diversity in UK boardrooms, and this should give us reason to be hopeful that these companies are now in a better position to outperform.”