Essential Corporate News – Week ending 15 March 2024

Parker Review: Improving the ethnic diversity of UK business – Update report

On 11 March 2024, the Parker Review Committee published its latest update report on ethnic minority representation at board level and in senior management at FTSE 350 companies and at the 50 largest private companies in the UK.

Background

In 2017, the Parker Review Committee set FTSE 100 companies a target of at least one ethnic minority director on the board by the end of 2021. FTSE 250 have until the end of 2024 to reach that target. In 2023, listed companies were also asked to provide information about the percentage of their senior management who were from ethnic minorities, and to set their own targets for what this percentage should be at the end of 2027.

50 of the largest private companies were also requested to provide data to the Parker Review Committee and to have at least one ethnic minority director on their top board. Those private companies were also asked to set a target for the share of ethnic minority executives in senior management at the end of 2027.

Summary of findings

• 96% of FTSE 100, 70% of FTSE 250 and 44% of those private companies currently meet the target of at least one ethnic minority director on their board.
• As a proportion of all board directorships, ethnic minority directors currently represent 19% of FTSE 100 directors, 13.5% of FTSE 250 directors and 11% of the private company directors.
• On average in senior management (normally defined as the members of a company’s executive committee and the senior executives reporting directly to them), ethnic minorities currently represent 13% in the FTSE 100 and 12% in the FTSE 250.
• Of the companies that shared their data with the Parker Review Committee, the average target for the proportion of ethnic minority representation in senior management in 2027 is 17% in the FTSE 100 and 15.5% in the FTSE 250.

Other aspects of report

The report looks at the findings summarised above in detail. Section 4 then sets out how the extension of scope and corresponding data collection processes will help the Parker Review Committee to address issues such as the percentage of chair and executive director roles which are filled by ethnic minorities being lower than the percentage of non-executive director roles filled by ethnic minorities. By doing so, the Parker Review Committee hopes to provide companies with support to complete the survey and greater transparency in how they intend to report this data.

The report also includes a section (Section 5) which provides perspectives from key stakeholders actively involved in enhancing ethnic diversity in UK business. The first perspective is that of CEOs, to examine and demonstrate the impact of CEO engagement on ethnic diversity. There are then perspectives from an academic, an executive recruiter and from the ‘Change the Race Ratio’ campaign which is designed to help companies achieve the Parker Review targets and to enhance ethnic inclusion more generally in the corporate sector. It sets out in Section 5 its five ESG recommendations to align culture and inclusive objectives with business strategy.

(Parker Review Committee, Improving the ethnic diversity of UK business – Update report, 11.03.2024)