LONDON (Reuters) - Britain’s listed companies should be forced to explain why they have so few women on their boards, the country’s corporate governance policeman said on Thursday.
The Financial Reporting Council is consulting on requiring all listed firms to explain what steps they are taking to smash the glass ceiling holding back women in the corporate world.
The FRC said women made up only 12.5 percent of board members in Britain’s top 100 blue chip companies last year and that diversity makes a board more effective.
“Diversity widens the perspectives brought to bear on decision-making, avoids too great a similarity of attitude and helps companies understand their customers and workforces,” FRC Chairman Baroness Hogg said in a statement.
“A board with too few women on it risks a weakness in at least one of these respects.”
Female directors take up just 135 of the 1,076 directorships on boards of FTSE 100 companies in Britain, according to a recent report by Cranfield School of Management.
A new section in companies’ annual reports should include a description of the board’s policy on gender diversity in the boardroom, including any measurable objectives that have been set, the FRC’s proposed code change said.
Under UK listing rules firms must report how they comply with the FRC’s standards of good practice, including board composition, audit and relations with shareholders.
The code was changed last year to include a reference to the benefits of diversity in general but a government-commissioned report in February called for “measurable” objectives though stopping short of backing fixed quotas for women board members.
The consultation paper says it would not be appropriate to single out gender diversity for special attention when considering a board’s effectiveness.
The FRC will announce later this year if and when it will change the code.
“Early implementation might also help in the context of the debate taking place in Europe, by demonstrating a workable alternative to quotas,” the FRC paper said.
The European Union is consulting on going a step further with possible quotas for women executives.
The UK government may also introduce rules to force companies to report the percentage of women on boards, in senior management and throughout the company.
Reporting by Huw Jones; Editing by Mike Nesbit