The Financial Conduct Authority will move forward with rules to compel listed companies to disclose diversity information.
In a policy statement released today (April 20), the regulator said it received broad support for its proposals.
It maintained requirements to disclose representation goals for women and ethnic minority groups on a comply-or-explain basis.
The “comply or explain” statement will see listed companies target the representation of women on the board of directors to a minimum of 40%.
The regulator has also confirmed a rule consisting in providing figures in the form of a table on the diversity of a company’s board of directors and general management.
However, the FCA said it was concerned about the proposed basis for reporting on women’s representation.
This includes confidentiality concerns about the interplay between its proposed disclosure requirements and similar reports under the Companies Act.
The FCA said its finalized rules give companies the flexibility to decide on the most appropriate approach to collecting data for reporting against the women’s representation goal and for related digital disclosures.
Companies will determine for themselves how best to collect and report the data, but will be required to explain the approach they have taken and will need to adopt a consistent approach.
Companies will also be required to ensure that any existing disclosures on diversity policies relate to key board committees and other broader aspects of diversity.
This could include considerations of ethnicity, sexual orientation, disability, low socio-economic background and other diversity characteristics.
The final rules will apply to accounting periods beginning on or after April 1, 2022, meaning that new information will begin to appear in published annual financial reports from around the second quarter of 2023.
However, the FCA encourages companies whose financial years started on or after January 1, 2022 to report targets sooner.
Companies can provide figures relating to their current accounting period on a voluntary basis.
Reacting to the proposals, a spokesperson for the Chartered Insurance Institute (CII) said: “While we welcome the FCA’s policy statement this morning, we believe that what is still needed involves dedicated constructive planning and positive action. to get to where we collectively think we should is heading towards the benefit of all.
“ICN actively measures the diversity of its Board of Directors and Executive Committee with identified actions and has long maintained that the key to innovation and success lies in adequate access to the diversity of ideas found in the whole of society.
“It is important to accept and understand that when our talent pool is limited, we are in fact limiting ourselves as an organization, and therefore limiting the benefits we can provide to those we serve.
“Addressing D&I should be one of the highest priorities for the profession if we are to dismantle the unfair barriers that prevent people from entering insurance careers.
“Executives need to understand where the barriers are that prevent talented people from all walks of life from advancing in their careers.”
Reed Smith, a partner at Delphine Currie, adds: “While some will be disappointed that the FCA has not gone further in imposing minimum levels of diverse representatives, the ‘comply or explain’ regime is familiar to publicly traded companies. United Kingdom and follows the model adopted for companies. governance more generally.
“Companies that fail to comply with the UK’s corporate governance regime often fail to attract investment from institutional funds, and failure to comply with the FCA’s new diversity requirements is expected to have similar consequences.
“The new rules will be difficult for some businesses. While many listed companies have appointed directors from diverse backgrounds in recent years, there are many that have made no or only nominal appointments. This will likely lead to fair competition for various non-executive directors.