FCA seeks views on Listing Rule changes on board and executive diversity

The authority proposes introducing a “comply or explain statement” on gender and ethnic minority targets.

The UK’s Financial Conduct Authority (FCA) set out Wednesday a series of proposals to improve transparency for investors about the diversity of listed company boards and their executive management teams.

Specifically, the FCA is seeking views on changes to its Listing Rules that would require listed companies to publish annually:

  • A “comply or explain statement” on whether they have achieved certain proposed targets for gender and ethnic minority representation on their boards. The targets are for at least 40% of the board to be women (including those self-identifying as women), at least one of the senior board positions (chair, CEO, CFO, or senior independent director) should be a woman (including individuals who self-identify as a woman), and at least one member of the board should be from a non-white ethnic minority background.
  • Data on the make-up of their board and most senior level of executive management in terms of gender and ethnicity. This would be part of the same annual disclosure obligation.  

However, the Listing Rule diversity targets are not mandatory for companies to meet. The FCA said it is not setting “quotas”, but rather providing “a positive benchmark for issuers to report against”.

The FCA is also proposing changes to its disclosure and transparency rules to require companies to ensure any existing disclosure on diversity policies addresses key board committees. These include those required under the UK Corporate Governance Code: audit, remuneration, and nominations committees.

Clare Cole, the FCA’s director of Market Oversight, said there was a lack of standardised and mandatory transparency about listed company board diversity, “particularly outside the FTSE 350 [that does] not provide data to the voluntary initiatives in this area”.

She added: “But interest from investors is growing, and companies are increasingly focusing on this topic due to ESG investing, as well as wider social and public policy concerns.”

Consultation responses, either emailed to or made online, are due 20 October 2021. The FCA said it will seek to make the rules by late 2021, subject to consultation feedback and FCA Board approval.

Oliver Rowe ( is an FM magazine senior editor.