Diversity and Inclusion  

IA to issue 'red' warnings for companies with poor diversity

IA to issue 'red' warnings for companies with poor diversity
Martin Péchy from Pexels

The Investment Association will give red and amber reports to help investment advisers and managers analyse the diversity and inclusiveness of listed companies.

Ivis, the IA’s Institutional Voting Information Service, will issue ‘amber’ reports to FTSE 350 companies that do not disclose either the ethnic diversity of their board, or a credible action plan to achieve the Parker Review targets of having at least one director from an ethnic minority background by 2021. 

With investors also seeking greater progress on gender diversity, companies whose board comprise 30 per cent or fewer female directors will receive a ‘red’ report – an increase on last year’s 20 per cent threshold.

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Andrew Ninian, director of stewardship and corporate governance at the Investment Association, said: “The UK’s boardrooms need to reflect the diversity of modern-day Britain.

"With three-quarters of FTSE 100 companies failing to report the ethnic make-up of their boards in last year’s AGM season, investors are now calling on companies to take decisive action to meet the Parker Review targets.

"Those who fail to do so this year will find themselves increasingly under investors’ spotlight.”

Ivis monitors all companies in the FTSE All-Share index and the top 50 companies in the FTSE Fledgling index for compliance with corporate governance best practice, the ABI Guidelines and the UK Corporate Governance Code.

An Ivis report is produced for all annual and general meetings and while it does not provide voting recommendations, it is colour coded to reflect any breaches of best practice or to highlight areas of concern.

The colour showing the strongest concern is red, followed by amber. Blue indicates no areas of major concern, while green indicates an issue has now been resolved.

Anita Boniface is a freelance journalist

The FTAdviser Diversity In Finance Awards 2021 are now open for submissions, from individuals and companies who can demonstrate they have gone the extra mile in 2020 to improve diversity and inclusion and make their businesses better for clients, staff and the wider community. 

For more information on the categories visit: FTAdviser Diversity In Finance Awards 2021.