Increasing women on company boards is not a matter of quotas – 30% Club
GLOBAL - The issue of increasing the number of women on company boards should not be diluted with EU quotas, according to participants of the 30% Club Investor Group initiative at the first anniversary of Lord Davies' report on the matter.
Speakers at this morning's seminar in London, hosted by Newton Investment Management, were in favour of the UK's 'comply-or-explain' approach rather than an EU quota system, as board appointments should continue to be made on merit.
Chris Hitchen, chief executive at RPMI, said: "RPMI Railpen welcomes the fund management industry's response to engaging on board diversity, and we will continue to incorporate board diversity into our own discussions with companies.
"We are clear that diverse boards should be delivered through a best practice approach, in keeping with the tradition of governance application in the UK."
Sir Roger Carr, chairman at Centrica and president of the Confederation of British Industry (CBI), said momentum and engagement by various people were critical to the process of getting women into boardroom.
"If the pace slackens, the process could stutter and potentially grind to a halt," he said. "It is in the hands of chairmen, CEOs, shareholders and mostly in the hands of women who have to show an appetite to fight against this.
"The group that can make a real contribution, the people who can make it happen faster, is the shareholders. The skill set, the mindset and the gender mix are on shareholders' minds, and failure to address this will dilute investor appetite."
He added that finding and selecting women for boards was relatively easy, but that it was absolutely critical they be made to feel welcome, especially the first woman through the door.
"It is not about women, but about making business in Britain better," Carr said.
The event kick-started the next stage of the 30% Club's campaign to increase diversity on boards by exploring the practical steps investors need to take to affect change in line with the diversity guidelines stated in the UK Corporate Governance Code.
Baroness Hogg, chairman of the Financial Reporting Council (FRC) added: "The changes we made to the code last year reflected the FRC's view that gender diversity strengthens board effectiveness by reducing the risk of groupthink, making fuller use of the talent pool and keeping companies in touch with their customers.
"We urge companies to demonstrate progress in this important area as quickly as possible."
The changes will be incorporated in an updated version of the Corporate Governance Code to be published in 2012, following consultation on proposed changes to other parts of the code, which will apply to financial years beginning on or after 1 October.
Women currently make up 15.2% of FTSE 100 directors, up from 12.5% in 2010, and 9.4% of FTSE 250 directors, an increase of 1.6% on 2010.
Three FTSE 100 companies have already reached 30% - Diageo, Burberry and Pearson.
Carr added: "Over the past year, we have seen encouraging progress - in 2011, 100 women were appointed to FTSE 100 and FTSE 250 boards, over half being new to the role of director.
"The rate of female appointments has more than doubled, with 27% of new appointments going to women - both for FTSE 100 and FTSE 250 roles.
"FTSE 100 boards are halfway towards the 30% ambition, with 15.2% female representation. Sadly, however, there's still a long way to go."
Lord Davies' report said that FTSE 100 boards should aim for a minimum of 25% female representation by 2015.
Four investors - Aberdeen Asset Management, BlackRock, Hermes Equity Ownership Services and the Local Authority Pension Fund Forum - today announced their support of the initiative by joining the 30% Club, taking the assets represented to more than £1.7trn (€2.1trn).
Led by Emma Howard Boyd, sustainable investment and governance director at Jupiter Asset Management, the investor group was set up in November 2011 to encourage investors to engage on the issue of board diversity with chairmen and management teams, and to consider the issue when voting on the appointment and re-election of board members.
The new members join founding investors including Aviva Investors, Co-operative Asset Management, F&C Investments, Jupiter Asset Management, Legal & General Investment Management, Newton Investment Management and RPMI Railpen Investments.