In February 2020, an update from the Parker Review – a government-backed report into Ethnic Diversity in Boardrooms of UK-listed companies – showed that people of colour held only 178 or 6.8% of 2,625 director positions across the FTSE 350 index. The Report noted that only a handful of firms are propping up the numbers for Britain’s 350 largest public companies. Eight firms accounted for nearly 25% of the directors of colour, including mining companies owned and founded in Central and Southern America, and firms with roots in Asia and Africa.
The numbers are also stark when considering top leadership roles as only 15 people of colour served as chair or chief executive, including Carnival’s chief executive, Arnold W Donald, Ivan Menezes of the alcohol firm Diageo, and Octavio Alvídrez, head of the Mexican mining company Fresnillo.
The Parker Review gave FTSE 100 firms until the end of 2021 to appoint at least one non-white board-level director. The same target was set for the FTSE 250, but with a deadline of 2024. Sir John Parker has noted that he is confident the goals will be met, but Covid-19 has and will have an impact on board recruitment plans.
Sharon White’s recent appointment as chairman of the John Lewis Partnership was widely applauded and she was quick to acknowledge that change has been slow. In her maiden speech in February 2020, Ms White told senior managers the company needed to “improve the diversity of the partners we are hiring”, and after the recent ‘Black Lives Matter’ protests wrote an open letter to staff making clear there was “no place in the partnership for discrimination”.
Against this background KPMG's Board Leadership Centre puts a strong argument that with so many serious issues facing boards at present, it is tempting to view the current unrest as a societal or political issue that is not an appropriate and live boardroom topic. However, stakeholders are watching and will remember how forward looking companies acted in this moment, especially with links to company culture, risks and reputation.
This is not a time to “assign” this task to one token person on the board - it should be a full boardroom exercise. The focus should be on better understanding the issues as they impact each of the company’s key stakeholders – employees, customers, suppliers, investors as well as the broader community.
Yet another reason why board diversity is so important. A diverse board brings different perspectives and understanding to enrich discussions around corporate purpose and culture to ensure the company understands the unprecedented challenges that it faces today, especially as we navigate the ‘new normal’.
To read the Parker Report follow link 1 and for the recent article follow link 2.