Business backs CBI campaign to push for boardroom diversity
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Aviva, Microsoft, Deloitte and Linklaters are among the companies to sign up to a new campaign spearheaded by employers group CBI to encourage greater racial and ethnic diversity across British boardrooms.
The CBI will on Thursday launch the Change the Race Ratio group, which will call on businesses to set and publish clear targets for greater racial and ethnic diversity at board, executive committee and senior management levels.
As part of its push, the employers’ group is urging its members to sign up to the goals set out in the government’s 2016 Parker review into ethnic diversity in UK companies. These include a target of having at least one member from an ethnic minority background on every FTSE 100 board by the end of 2021.
Change the Race Ratio wants to foster greater support from business for the strategy, which is in danger of missing the 2021 target. This year, an update to the review revealed “slow progress”, with 37 per cent of FTSE 100 companies lacking any minority ethnic representation on their boards.
The review also said smaller companies in the FTSE 250, where two-thirds of boards have no ethnic diversity, should aim to have at least one member from a minority background by 2024.
The campaign is the first major policy move by Karan Bilimoria, the CBI’s new president — and the first to come from an ethnic minority background — since he took over in the summer.
Lord Bilimoria said: “The time has come for a concerted campaign on racial and ethnic participation in business leadership. Progress has been painfully slow.”
He added that CBI wanted “to do for racial and ethnic diversity what the 30% Club has done so successfully for gender equality” — pointing to the work done by that business organisation to help reach the target of having women comprise 30 per cent of board members.
The Change the Race Ratio campaign will be launched officially at the end of October. Other founding members include Cranfield University, PR firm Brunswick and Russell Reynolds, the recruiters.
“This is just the beginning,” said Lord Bilimoria, who added that businesses with a more diverse management tended to enjoy greater growth and suffer lower risk. Research from McKinsey shows there is a relationship between diversity on executive teams and the likelihood of financial outperformance.
The campaign is also calling for companies to increase racial and ethnic diversity more broadly in senior leadership, with “clear and stretching targets” to be published within 12 months of joining the group. Progress should be published in the annual report or on the company website.
In July, Ruby McGregor-Smith, a Tory peer and author of a 2017 government review into racial disparities in the British workplace, told the FT that Boris Johnson needed to implement her recommendations. These include requiring companies to publish data on ethnic diversity by pay band.
The CBI campaign is also supporting Ms McGregor-Smith’s review, saying companies should disclose ethnicity pay gaps by 2022 at the latest.
Richard Houston, chief executive of Deloitte UK, said the “energy of the Black Lives Matter movement has given a fresh sense of urgency around racial diversity in business”.
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