July 23, 2014 7:32 pm

All-women shortlists for boards ruled illegal

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Business secretary Vince Cable©Bloomberg

Business secretary Vince Cable

Vince Cable’s hope of using all-female shortlists to get more women on to the boards of large companies has been thwarted. The Equality and Human Rights Commission said the practice would be unlawful as a way of tackling underrepresentation.

The business secretary had asked the equalities body to advise on the legality of excluding men from shortlists as part of an effort to improve the gender balance in boardrooms.

The commission published guidance on Wednesday saying it did not believe it was lawful to address underrepresentation “by longlisting or shortlisting only female candidates to the detriment of male candidates”.

An all-female list would be lawful only if there was “no predetermination to draw up an all-women shortlist and an objective and consistent assessment of all candidates demonstrates that the best qualified candidates are all women”.

Mr Cable had sought the advice after receiving a report into the headhunters’ code of practice by Charlotte Sweeney, former head of diversity at banks including HSBC and Nomura.

She said the commission should be asked to clarify whether all-women shortlists could be an option for boards and executive recruiters.

Women now make up 22 per cent of FTSE 100 board positions, largely in non-executive roles and there are no all-male boards after mining company Glencore appointed a woman non-executive director last month.

But Mr Cable told the Financial Times in March that the government needed to keep up pressure to reach its target of 25 per cent female representation on FTSE 100 boards by 2015.

The EHRC said it constituted unlawful sex discrimination to select a person for a role because of their gender. The law did not permit positive discrimination when making an appointment or a promotion.

But the commission said steps that could be taken included setting aspirational targets to increase the number of women on boards within a particular timescale, providing networking opportunities for women and providing mentoring and sponsor programmes.

Mr Cable welcomed the guidance for clarifying the issue and highlighting what lawful measures could be taken to increase boardroom diversity.

“This will really help our top businesses in what has been in the past a bit of a legal grey area. It confirms it is good and accepted practice for companies to set ambitious aspirational targets to increase the number of women on their board,” he said.

EU law permits women-only shortlists for political parties because that falls outside the scope of employment and occupation.

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