Top companies urged to give women a third of leading roles

Britain’s biggest public companies should publish how many female senior executives they have and make one-third of their executive positions female by 2020, according to a government-backed review.

The review, chaired by Sir Philip Hampton, the chairman of GlaxoSmithKline, said the UK’s corporate governance code should be amended so that all FTSE 350 companies disclose their gender balance in their annual reports and accounts.

As well as a goal of one-third of FTSE 350 board members to be female by 2020, the review recommended that at FTSE 100 companies women should make up one-third of the employees who are on, or directly report to, executive committees.

Sir Philip said he expected a review of the governance code to happen next year, earlier than expected, given prime minister Theresa May’s focus on improving corporate behaviour.

“It’s better to make [gender balance] a required disclosure rather than go through the same old chase [with companies] every year,” he said.

The percentage of women on executive committees
had “flatlined” for the past eight years, and while the new target would be “stretching”, he said “the most important thing is for every company to have a clear plan”.

Women make up less than a fifth – 19 per cent – of executive committee positions at FTSE 100 companies. Some 12 FTSE 100 companies, including Royal Dutch Shell, Babcock International and Barclays, have all-male executive committees, and 11 FTSE 250 companies have all-male boards.

Yesterday Margot James, business minister, said there should be “constant pushing” by the government on gender and ethnic diversity.

“It is not, regrettably, something companies or the regulatory bodies do by themselves,” she said. “It is something that the majority of corporate leaders now think is the right approach to take, but in amongst all their other priorities, it takes a fairly low status.”

Ms James said that while it was premature to threaten legislative sanctions such as quotas if companies failed to make progress, “I wouldn’t rule anything out for the future”.

“A more inclusive board engenders better decision-making. When companies wake up to that, they will play ball.”

One-fifth of the FTSE 100, including AstraZeneca, British Land, Burberry and Diageo, already have executive committees and direct reports with a third or more women.

There is a higher percentage of women who are directly reporting to executive committees than at the very top level of the FTSE 100, suggesting that complaints from companies that they do not have enough women to promote are unfounded.

At FTSE 100 level, 92 companies provided the review with information about their gender balance at senior levels. But only 142 companies in the FTSE 250 did so, prompting a criticism from the review, which said it had been impossible to set a “reliable starting point and baseline upon which to build” for those companies.

Sir Philip warned companies against a “degree of complacency”, but said he continued to believe that voluntary targets, rather than mandatory quotas, were the most effective means of changing business behaviour.

The UK is ranked sixth in terms of female board representation, with most of the countries above it – such as Norway, in first place – having adopted legislative quotas     rather than voluntary regimes.

Dame Helen Alexander, deputy chair of the review, who also chairs UBM, the media company, said there was “huge support” from the government but that she and Sir Philip acknowledged that Brexit had pushed other “business as usual” items down the agenda.

“We’ve had no problem at all with getting engagement with ministers,” Sir Philip said. “But are these sorts of things front of mind given Brexit? Clearly not.”

The review said investors should have a clear policy on gender balance at the companies in which they invest, which could include voting against re-election of chairmen where insufficient progress was being made.

Dame Helen said fund managers would be unlikely to sign up to voting against a company just on the grounds of gender balance, but some fund managers, such as Legal & General, were looking at the issue as part of their corporate governance responsibility.

The Hampton-Alexander review builds on the Davies review, which called for a quarter of FTSE 100 boards to be made up of women by 2015. The target was met that year, but there has been
little progress since. In the FTSE 350 in October, women made up 23 per cent of boards, up from 21.9 per cent a year ago.

The Hampton-Alexander review will report on progress made towards the targets at the same time next year.

Sir Philip said that while “naming and shaming” was not a phrase he was prepared to use, companies which were not making progress would be identified.

Tomorrow, is Equal Pay Day, marking the day on which women effectively start working for free for the rest of the year because of the gender pay gap.