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FCA set new targets for listed companies (D&I)

What is this?

The Financial Conduct Authority (FCA) has set targets for listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management. This was communicated as an FCA policy statement on 20th April 2022.

What is the purpose?

The FCA has focused on enhancing the pace of change in relation to diversity in listed companies and making it easier for investors to see the diversity of their senior leadership teams.

What are the targets?
  • At least 40% of the board should be women.
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Chief Financial Officer (CFO) or Senior Independent Director (SID) should be a woman.
  • At least one member of the board should be from an ethnic minority background excluding white ethnic groups (as set out in categories used by the Office for National Statistics).
  • Applicable companies are required to share D&I statistics on their annual reports and make available their diversity policy for their key board committees (in addition to the policy for their board).
Who does it apply to and when?
  • The FCA confirmed that the rules will apply to all UK and overseas companies with equity shares, or equity shares represented by certificates (including global depositary receipts), admitted to either the premium or standard listing segments of the FCA’s Official List in the UK or considering admission to such listings.
  • Rules apply for financial accounting periods starting from 1 April 2022. The FCA will review the rules in 3 years’ time to make sure they are working and to check if the diversity targets are still appropriate.
 What can organisations do?
  • Ensure there are appropriate processes and controls to meet the requirements.
  • Organisations can use the new requirements to address how external recruitment is conducted and the processes around succession planning, being mindful of positive discrimination risk.
  • Conduct a data collection exercise without jeopardising the privacy of employees.
  • Where there may be non-compliance organisations should communicate their plans and commitment to the D&I requirements.

More information can be found on the FCA website:

https://www.fca.org.uk/news/press-releases/fca-finalises-proposals-boost-disclosure-diversity-listed-company-boards-executive-committees

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