Gender diversity on FTSE 350 boards is improving according to FT-ICSA survey

The UK’s top companies look set to meet targets to increase the number of women on their boards according to the latest FT–ICSA Boardroom Bellwether survey. This follows the Davies Review which found that within the FTSE 100 a milestone of 25% of board positions being filled by women had been met this year – a target set by Lord Davies in 2011. A new target has now been set of achieving 33% of board positions being filled by women across the FTSE 350 by 2020 which would mean around 350 more women in top positions.

The FT-ICSA survey of FTSE 350 boards found that 68% of respondents rated their boards diverse or very diverse in terms of gender up from 37% in December 2012. Asked if they had yet achieved 25% of board members being women just half (49%) reported that they have met this although 21% stated that they are very close, having achieved 20–24%. However, the survey found that boards were looking to improve their gender diversity in the future. With all the focus on achieving gender diversity on boards the survey found that just 25% of respondents feel their board to be ethnically diverse.

Succession planning appears to still need improvement with just 49% of respondents have a written board succession plan – only slightly up from 44% reported in July 2014 – while only 37% feel their executive pipeline provides a sustainable pool of talented and diverse board members.

In respect of assessment of risks for companies the Institute of Chartered Secretaries and Administrators (ICSA) found that the top three identified remained the same as the previous survey with economic risk the most important followed by operational and reputational. Cyber risk and political risk are rated joint fourth. A higher than ever 82% of respondents believe the threat of cyber attack is increasing. Three quarters have assessed and are mitigating this rise, with external help if needed.

The survey also asked about training of non-executive directors. It was found that over half the respondents provide one or two days’ annual training for their non-executive directors and 26% provide three to five days. Very few provide more than five days and 16% said they had provided none at all in the past year. In the majority of companies (61%) non-executives
are either members of all board committees or are invited to attend meetings of those board committees of which they are not a member. This percentage rose to 68% for the Audit Committee, which ICSA said reflected the additional regulatory focus on the responsibilities of that committee.

ICSA said engagement and stewardship lie at the heart of its focus on good governance. Only 3% said none of their top ten shareholders had been met by non-executive directors in the past year but 25% had only managed to meet with one or two of the top ten. According to ICSA there seems to have been some softening of attitudes towards proxy advisers with 37% rating their influence as neutral, up from 23% in July 2015. However, the majority of responses rated them as much more negative than positive (47% compared to 11%).

In the last survey in July ICSA began asking questions about corporate culture and the degree to which it had been discussed in the boardroom. In this survey it was found that 63% are addressing these issues at board level while 75% of respondents said they are actively addressing culture and behaviour in the wider organisation although less than half (44%) provide training on ethical behaviour and culture.

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