Break the Shackle on Women in Corporate Governance, UK Firms Urged
Gender diversity in the boardroom has captured corporate governance as the Financial Reporting Council (FRC) sets about a consultation with UK firms over requiring them to publish their policy on the issue and report against it annually.
The consultation follows the recommendation of Lord Davies published in February 2011 ordering the FRC to “amend the UK Corporate Governance Code to require listed companies to establish a policy concerning boardroom diversity, including measurable objectives for implementing the policy, and disclose annually a summary of the policy and progress made in achieving the objectives.”
Similarly today, Nessa Childers of the Irish Labour Party, talked with Viviane Reding, vice president of the European Commission, and Ursula von der Leyen, the German Minister of Social Affairs, in a meeting about a pledge seeking to increase the presence of women in corporate boards to 30% by 2015 and to 40% by 2020.
Childers is urging the top 100 Irish publicly-listed companies to sign the pledge, “Women on the Board Pledge” initiated by the EU Commission.
Meanwhile, the FRC is seeking whether the Corporate Governance Code should identify the key issues involved when the boards conduct their regular effectiveness reviews. Part of the consultation is the timing of any changes that might be made to the Code.
Citing the reasons for proposing to amend the Corporate Governance Code, FRC Chairman Baroness Hogg said: “Diversity widens the perspectives brought to bear on decision-making, avoids too great a similarity of attitude and helps companies understand their customers and workforces. A board with too few women on it risks a weakness in at least one of these respects.”
In June 2010, the Code was amended, thus “the search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender.”
February this year when the UK expressed its resolve to increase the number of women in the boardroom. In a Parliamentary report published February 24, the FTSE 100 boards were urged to increase female representation to at least 25% in about four years. Otherwise, they will face rigid actions for non-compliance.
By 2012, France eyes a 20% quota in the number of women in the boardroom, with plans of increasing it to 40% by 2016.
Likewise, Italy, Netherlands, and the European Commission plan to urge all public companies to increase their female representation to 40% in a voluntary code. Failure to do so might force a company to face mandatory quotas in the next five years.