Smaller companies lag FTSE 350 names on gender and racial diversity at board levels, study finds

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The boards of FTSE All-Share companies below the FTSE 350 aren’t diverse enough, according to a new study.

Only 16% of them have female chairs, 7% have female chief executives and 3% have directors of colour, said campaign group Women on Boards UK.

Just below half of the firms have met the target for 33% women on boards, compared to 65% in the FTSE 350, and 54% of them have all-male executive boards compared to only 8% in the larger groups.

Of the 261 companies examined, 48 had over half of their board made up of women, while 98 had either just one or no women at all.

But even though the bigger firms have more diversity, their average gender pay gaps are 20.2%, compared to 17% in the smaller firms and the national average of 13.7%.

Researchers said that looking at the quality of gender pay gap reports in those 261 smaller caps, many demonstrated “a low priority; low transparency; and were lacking in action”.

“These are clear, if unacceptable, explanations for why their pay gaps are so high and static. Yet other firms do demonstrate high quality and innovative action,” they added.

Women on Boards UK’s research continues the work of two key initiatives that are set to conclude in 2021.

The Hampton-Alexander Review has provided government-backed monitoring and scrutiny of boardroom diversity in the FTSE 350 since 2016 and the Parker Review has offered similar on ethnic diversity.

Investors such as Legal & General Group PLC (LON:LGEN) have been very vocal about the need to diversify the boards of big caps to comply with ESG standards.

“Progress on board diversity has been painfully slow, yet, recently, there has been a creeping sense that what has been achieved is ‘enough’ and no more effort is needed,” said the group’s chief executive Fiona Hathorn.

“This report… exposes the hidden truth that, beyond the overall number of female non-executives, progress has been extremely limited. Our data also reveals a very significant proportion of FTSE All-Share firms are achieving little, if any, meaningful change as regards to diversity and inclusion.”

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