The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, announced today a series of proposed changes to its Listing Rules aimed at boosting transparency into gender and ethnic diversity at publicly listed companies.

Along with the proposed rules, the FCA established diversity targets for companies to report against, including having women make up least 40% of the board, with a woman in at least one senior board position, and at least one board member from a Non-White ethnic minority background. Under the proposals, companies would not be required to meet these targets, but would issue a “comply or explain” statement annually, along with disclosure of data on the gender and ethnic representation on their boards and in senior executive management. The proposals would apply to both UK and overseas companies with equity shares in either the premium or standard listing segments.

For companies with securities traded on UK regulated markets, the FCA is proposing rules that would require companies to ensure any existing disclosure on diversity policies addresses key board committees, and to consider broader aspects of transparency, such as ethnicity, sexual orientation, disability, lower socio-economic background and other diversity characteristics.

According to Clare Cole, Director of Market Oversight at the FCA, the proposed rules aim to address the lack of standardised transparency on diversity topics at public companies, particularly outside of the largest listed issuers.

Cole said:

“Our proposals are intended to increase transparency by establishing better, comparable information on the diversity of companies’ boards and executive committees. This will provide better data for companies and investors to assess progress in these areas and make investment decisions, reduce investor search costs, and inform shareholder engagement, enhancing market integrity. 

“Over time, we expect enhanced transparency may strengthen incentives for companies towards greater diversity on their boards and encourage a more strategic approach to diversity in their pipeline of talent. This may have broader benefits in terms of the quality of corporate governance and company performance in due course.”

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