FCA finalises proposals to boost disclosure of diversity on listed company boards and executive committees

The FCA has finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management, making it easier for investors to see the diversity of their senior leadership teams.

The FCA’s approach sets positive diversity targets for listed companies. If they cannot meet them, they need to explain why not. This approach allows flexibility for smaller firms or those based overseas. The rules also allow companies to decide how best to collect data from employees to show they are meeting the targets.  

The rules will apply to listed companies 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. 

This work reflects the FCA’s focus on speeding up the pace of change around diversity and inclusion in financial services. 

Sarah Pritchard, Executive Director of Markets at the FCA said:

'As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress.' 

Notes to editors

1. The ‘comply or explain’ statement targets are as follows:

  • 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).

2. ‘Key board committees’ include those required under the UK Corporate Governance Code, specifically committees on audit, remuneration and nominations.  

3. The scope of the Listing Rule proposals includes 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.  

4. CP21/24: Diversity and inclusion on company boards and executive committees (PDF)

5. DP21/2: Diversity and inclusion in the financial sector - working together together to drive change (PDF) 

6. The Hampton Alexander Review and Parker Reviews.