David Prosser: If Britain can't reform the boardroom, let Brussels do the job
Thursday 05 May 2011
Outlook The pace of reform in Britain's boardrooms is agonisingly slow. Two months ago, Lord Davies, the former trade minister, published his proposals for increasing the pitifully small number of female directors of quoted companies. It has taken until today for the Financial Reporting Council (FRC), the body that sets the corporate-governance rules for these companies, to respond. Now we'll have another consultation.
It's not as if Lord Davies's ideas were especially radical – he simply suggested we should aim for women to account for 25 per cent of directors by 2015, but withcompanies publishing their own targets and then reporting to shareholders on progress. This "comply or explain" approach to corporate governance is a much-favoured cop-out in boardroom Britain. Naturally, Lord Davies passed on the opportunity to introduce the mandatory quotas that several other European countries have gone for.
You can tell that the reform process is taking too long by the fact that even the Confederation of British Industry (CBI) is getting a little concerned. In a statement today, it basically says that the FRC should jolly well get on with implementing Lord Davies' recommendations. Why is the CBI – not usually a fan of additional regulatory burdens on companies – so anxious? The answer is that it worries Britain has taken so long to get to grips with gender diversity that the European Commission will take the decision out of our hands.
One can see the CBI's point. There can be no accusing the FRC of acting hastily. Having spent two months getting ready to launch its consultation, it is asking for feedback before the end of July. "A decision on whether to amend the Code and, if so, the timetable for doing so, will be announced later in the year," it adds.
Conspiracy theorists may wonder whether the FRC – which is run by a woman, Baroness Hogg, after all – is deliberately trying to goad Brussels into enforcement action that forces Britain to do more than Lord Davies has suggested. Sadly, probably not.
Here's a quick reminder of why this is important. Women account for just 12.5 per cent of the directors sitting on FTSE 100 company boards, with that figure falling to 7.5 per cent in the FTSE 250.
Do not assume this will change any time soon without legislation. Consider, for example, the attitude of the chairman of the next addition to the FTSE 100, Simon Murray of Glencore, who told an interviewer a couple of weeks ago that women are "not as ambitious in business as men because they have better things to do... quite often they like bringing up their children and all sorts of other things".
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