Women should make up at least 40 per cent of the boards of all listed companies, which also should have a minimum of one non-white ethnic minority director, the Financial Conduct Authority has said.
The proposals build on voluntary initiatives to increase diversity, but will push companies to do more. Britain’s top 350 listed companies have largely met a target of 33 per cent women on their boards, but have fallen short of a target that each FTSE 100 board should have at least one director of colour by 2021.
The authority, which polices the listing rules for all types of companies, also proposed that at least one senior position, such as a company chair, chief executive or chief financial officer, be held by a woman.
The changes to the FCA listing rules are expected to take effect late this year after a public consultation. They would affect 1,106 companies.
Investors increasingly are choosing businesses that meet environmental, social and governance objectives, including cutting carbon emissions or hiring a more diverse workforce. Companies listed in London would have to comply with the targets or explain to shareholders in their annual reports why they had fallen short.
The regulator may look to expand reporting and targets to areas such as sexual orientation, disability and socio-economic background and to levels below executive management.
Sarah Ozanne, an employment lawyer at CMS, a law firm, said: “This is a significant step towards transparency.”
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