Boardrooms 'need more ethnic diversity'

Ethnic diversity across UK boardrooms is "disproportionately low", according to a new report.

More than half of firms in the FTSE 100 do not have any directors from an ethnic minority on their board, the government-commissioned research shows.

It argues that every FTSE 100 company should have at least one non-white director by 2021.

This would better reflect the current UK workforce, the report says, and make companies more competitive.

Of the 1,087 director positions at firms in the FTSE 100 index, 8% are held by non-white directors, even though 14% of the UK is from a non-white ethnic group.

Just seven companies account for more than one-third of the directors with an ethnic background. Most of those have links to South Africa - they are the mining firms Fresnillo, Antofagasta, Randgold Resources, the insurer Old Mutual, and the brewer SAB Miller.

The other two are the Anglo-Dutch household goods supplier Unilever and the Asia-focused bank Standard Chartered.

'Not just tokenism'

Sir John Parker, who led the review, said: "The boardrooms of Britain's leading companies do not reflect the ethnic diversity of either the UK or the stakeholders that they seek to engage and represent."

He added: "Ethnic minority representation in the boardrooms across the FTSE 100 and 250 is disproportionately low.

"This is not an exercise of tokenism; the recommendations are underpinned by strong industrial logic and the need for UK companies to be competitive in the increasingly challenging global marketplace."

The recommendations include requiring human resources teams in FTSE 100 and FTSE 250 companies to identify ethnically diverse people to be considered for board jobs when vacancies come in, as well as developing mentoring programmes.

Sanjay Bhandari from EY argues that a broader talent pool gives his firm a more competitive edge

It also recommends that companies set out their efforts in their annual reports, and where necessary detail why targets have not been met.

Accountancy firm EY, which supported the report, has been running a diversity programme for the past five years, and has more than doubled the number of black and ethnic minority partners in their business to 8%.

Sanjay Bhandari from EY says the broader talent pool gives the firm a more competitive edge. "We are making strides, but there is still more to do," he says.

The report is now open to consultation, with the final findings and recommendations due in 2017.