The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, announced today that it has finalised rules for listed companies to disclose on diversity and inclusion at the board and executive committee level, beginning from financial periods starting from April 1, 2022.
Under the new listing rules, companies will have to include a statement in their annual financial report setting out if they have met specific diversity targets set by the regulator. The targets include having women make up at least 40% of the board, with a woman in at least one senior board position, such as Chair, CEO, CFO or Senior Independent Director, and at least one board member from a Non-White ethnic minority background.
Additionally, the rules expand the reporting requirements for companies to cover the diversity policies of key board committees, including audit, remuneration and nominations committees. The FCA also indicated that reporting on board and board committee diversity policies could consider wider diversity characteristics such as ethnicity, sexual orientation, disability and socio-economic background.
The new rules will apply to all UK-listed companies, including UK and overseas companies with equity shares, or equity shares represented by certificates such as global depositary receipts in both the premium or standard listing segments, as well as to companies planning to list shares.
The FCA is introducing the rules on a ‘comply or explain’ basis, requiring companies that don’t meet the targets to explain why not. According to the regulator, this approach will allow flexibility for smaller firms or those based overseas.
Sarah Prichard, Executive Director of Markets at the FCA said:
“As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress.”
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