Britain's biggest businesses were warned yesterday that they will be forced to increase the representation of women on their boards if they fail to act on damaging findings by an inquiry which found that two-thirds of FTSE 100 companies have shunned making targets for change.
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In the six months since Lord Davies, the former chief executive of Standard Chartered bank, launched a review into female representation in boardrooms, just 33 companies in the FTSE 100 have heeded his recommendation that they set a target for an increase of greater than 10 per cent.
A progress report by the Cranfield School of Management found that of those companies which had set targets, only 10 had elected to go for an increase of more than 10 per cent.
Lord Davies's review, published in February, called for companies to aim for a minimum of 25 per cent of female directors by 2015. But the Cranfield research reveals that since the review just 21 women have been appointed to board positions out of a possible 93. This represents 22.5 per cent of new appointments and compares with the 33 per cent recommended in the Davies Report. The total number of women directors of FTSE 100 companies stands at 155 out of a total of 1,092 – just over 14 per cent, compared with 12.5 per cent at the end of last year. The number of executive directors, however, is much lower, with just a handful of chief executives and finance directors.
Ruth Sealy, one of the co-authors of the report, described the findings as "a wake-up call" that businesses must heed. She said: "We are not in favour of quotas but business needs to be aware that it needs to sort this out, because if it doesn't it will face legislation, if not at the UK level then at the EU level."
She noted that Michel Barnier, the EU commissioner for internal market and services, had already looked into the legality of forcing change upon businesses. The CBI has raised concerns about EU intervention.
Ms Sealy said: "One of the things that really struck me was the tendency towards 'sit and wait and see if we have to respond' among companies. The message they need to get is you do have to respond. The EU is going to push this through. Businesses in other countries seem to realise this. Just not in Britain."
On Tuesday, the Financial Reporting Council, which oversees compliance with corporate governance codes, said that listed companies should report annually on diversity policy, including the representation of women.
The second-tier FTSE 250 has seen 28 (18 per cent) out of a possible 158 new board appointments going to women. A total of 133 FTSE 250 boards now have female directors. The report found no change in turnover of directors, suggesting that some companies are adjusting their recruiting behaviour rather than creating new positions. It also singled out Lloyds Banking Group and Rolls-Royce for "boldly" pledging to increase female representation by between 20 and 23 per cent.Reuse content