The latest EY Parker Review report emphasises the progress made by listed firms in enhancing ethnic diversity while also revealing the ongoing challenges faced by private companies. This aligns with the findings of the FTSE Women Leaders Review report released last month, both underlining the need for sustained efforts to promote diversity across all sectors.
The UK’s business-led approach to monitoring progress on board diversity has proved highly effective – not only at diversifying the FTSE 350 boardroom but at avoiding tokenism, as quota systems widely used in other territories risk doing. Whilst the progress shown in the Parker and FTSE Women Leaders Reviews is heartening, we believe it is ‘proof of concept’, not ‘job done’ when it comes to board diversity.
As this report comes in the midst of a rollback on EDI, a strong correlation between diversity and business outcomes has been shown in multiple studies. Whilst causation is hard to evidence, this is in part due to the benefits of diversity of thought and as true diversity in appointments is a strong indicator that boards are going out and looking for the ‘best talent they can find’, not the first ‘good enough’ person.
As these figures show, FTSE 350 boards are not yet fully representative of the UK population, but much progress has been made in reflecting the breadth of talent available.
Progress in Ethnic Leadership
The report indicates a modest increase in ethnic minority representation among top executives. There are currently 13 ethnic minority CEOs in the FTSE 100, a slight rise from 12 in 2023. 95% of FTSE 100 companies and 86% of responding FTSE 250 companies now have at least one minority ethnic director on their boards, marking a significant improvement. Although ethnic minorities hold 19% of all director positions on FTSE 100 boards – consistent with last year – there has been an increase in the FTSE 250, where ethnic minorities now occupy 15% of director roles, up from 13%.
Senior Management Representation
The representation of ethnic minorities in senior management roles remains low. In FTSE 100 companies, only 11% of senior management come from ethnic minority backgrounds, while this figure stands at just 9% in FTSE 250 companies. The report reveals a stark underrepresentation of Black senior managers, comprising only 1.2% of all FTSE 100 senior managers compared to 3.9% of the wider population.
The Role of Women in Leadership
Women hold 44% of board roles in the FTSE 100, with a slight decrease to 43% in the FTSE 250 and only 30% in the top 50 private companies. However, there is a positive trend, as the number of women chairs in FTSE 350 companies increased from 53 to 60, a 17% rise. Unfortunately, the number of women CEOs has decreased by one in the FTSE 350 from 20 to 19. There is also a drop in the top 50 private companies.
Disappointingly, out of the 13 ethnic minority CEOs in the FTSE 100, not a single role is held by an ethnic minority woman. While women represent 44% of board roles in the FTSE 100, there’s a lack of intersectionality, as ethnic minority women continue to be significantly underrepresented.
Private Sector Challenges
Among the 50 largest privately owned businesses, only 34 participated in the voluntary census. Of these, only 48% meet the target of having at least one minority ethnic director on their main board or equivalent. This indicates a clear disparity in ethnic diversity between public and private companies.
Merely appointing ethnically diverse directors is not enough. Kit Bingham, Head of Board & CEO Practice at Heidrick & Struggles UK, says, “Boards must ensure not just that an ethnically diverse director is appointed but also lands well and succeeds. There is little value in any director joining a board if they aren’t given the tools, support and environment to flourish.”
Our Hidden Truth report monitors gender diversity on boards across over 2,000 FTSE All-Share and AIM-listed firms in the largest study of its type. Our 2024 report revealed alarming statistics, such as only 8% of chairs across FTSE All-Share and AIM-listed firms being female, just 21 female CEOs in the FTSE 350 and 35% of AIM-listed firms having all-male boards. Clearly, there is still much work to be done.
As discussions around DEI face pushback in corporate contexts, it is crucial for companies to remain committed to fostering a diverse and inclusive environment. We’ve seen the evidence of this through our Corporate Partnerships and the inclusion of all genders in our membership, with our support particularly relevant to those from groups who are under-represented at board level.