FTSE 350 slammed over lack of gender diversity at the top
6 Mar 2020
Nearly one in five of the FTSE 350 companies have received letters from the Investment Association (IA) and the Hampton-Alexander Review about the lack of gender diversity on their board and executive committees, while the UK is only 16th in the global ranking of women in work
6 Mar 2020
These 63 companies have been asked to outline what action they are taking to improve the gender balance in their leadership teams and ensure they meet the Hampton-Alexander targets of a minimum 33% of women on their board and in their senior leadership teams by the end of 2020.
Earlier this year, the government-backed review found that across the FTSE 100 index, one third of all board positions are now held by women.
However, it highlighted that more needs to done by FTSE 250 boards, with 24 cautioned for having only one women on their board.
These so called 'one and done' boards were identified as having made little progress beyond appointing one woman only.
Thirteen companies have received a letter encouraging robust action to address the lack of women in their top teams for a second year running, in 2019 and 2020.
For the first time, companies with all-male executive committees were contacted. Letters were sent to 35 FTSE 350 companies, including four FTSE 100 companies, drawing attention to the lack of progress on women being appointed to their senior leadership teams.
An additional four FTSE 250 companies had an all-male executive committee and also only one women on their board.
Of the firms warned that they had all-male executive committees, four of them were FTSE 100 firms: Ashtead Group; Fresnillo; Melrose Industries; and Spirax-Sarco Engineering.
Those companies with ‘one and done’ boards and all male executive committees include AJ Bell, Ferrexpo, Hochschild Mining and Plus500.
The Investment Association says investment managers will be keeping up the pressure on companies during the 2020 AGM season to improve their gender diversity.
IVIS, the Investment Association’s institutional voting information service, will continue to give a ‘red-top’, its highest warning level, to companies which with just one woman (or less) women on their board.
This year, companies which have 20% or less gender diversity on their board or in their senior leadership teams will also receive a ‘red-top’.
Chris Cummings, chief executive of the Investment Association, said: ‘This is a critical year in which businesses need to demonstrate real change and meet the 33% target for gender diversity across their board and senior leadership teams.
‘Diversity results in better decision-making and plays an essential role in a company’s long-term success. Investment managers have been clear that as a minimum they want to see companies meet this target for gender diversity, and those which fail to do so risk facing dissent in the AGM season.’
Sir Philip Hampton, chair of the Hampton-Alexander review, said: ‘Expectations from government and investors regarding gender balance at the top of FTSE companies, and in wider business have been clearly set out.
‘Leaders of FTSE 350 companies that are still adrift of the 33% minimum target, need to rise to today’s challenge from the investment community and take swift action now to address the lack of women on the board and in their leadership teams.’
UK lags behind on women in work
With International Women’s Day in prospect this weekend, research shows the UK being outpaced when it comes to women in work, missing out on a potential £189bn hike in GDP.
The top three countries in the Women in Work 2020 Index are Iceland, Sweden and Slovenia, while the UK remains in 16th place.
The index, produced by PwC, analyses female economic empowerment across 33 OECD countries based on five indicators: the gender pay gap, female labour force participation, the gap between male and female labour force participation, female unemployment and female full-time employment rate.
While the UK performs above the OECD average and is second only to Canada when compared to other G7 economies, its position has barely budged since 2000 when it stood in 17th position, despite improving its performance across all five indicators.
Jing Teow, economist at PwC, said: ‘Although progress has been made across both the UK and OECD, the rate of improvement is still slow, despite the prospect of huge economic gains from increasing female participation in the workforce.
‘Indeed both the OECD and UK would receive massive boosts to GDP amounting to $6 trillion (£4.63 trillion) and £189bn respectively if they could match the best performing country, Sweden.’
Closing the gender pay gap across the OECD would increase total female earnings by $2 trillion. Female earnings in the UK would increase by £93bn, a rise of 20%.
Overall, the OECD countries achieved incremental gains to female economic empowerment last year. Iceland and Sweden retain the top two positions for the fifth year in a row, with Slovenia in third place. The Czech Republic experienced the biggest improvement in its ranking of all OECD countries, rising four places from 23rd to 19th, whereas Estonia and Ireland recorded the biggest decline.
Across all UK regions, London performed the poorest on the index due to poor female labour force participation and a high female unemployment rate. It fell three places to 12th, despite being the region that has achieved the most significant improvement in its index score since 2010, indicating that progress has stalled in the capital.
The research included data on women in the tech workforce, where Canada is the best performing country within the G7 in terms of gender representation and equality in the tech sector, with France in second place.
However in contrast to the main index, on which it is the second best performing country in the G7 and ranks in the top half of the OECD overall, the UK is fifth out of the G7 in the ranking of women in technology. Its poor performance is driven by worse than average performance on all indicators except the share of women on boards in the technology, media and telecoms (TMT) sector.
Laura Hinton, chief people officer at PwC UK, said: ‘Technology is front and centre for businesses and wider society, so it's vital we take steps to make the industry as inclusive as possible.
‘Long-term, targeted solutions will be vital in making changes sustainable. We know that in areas such as STEM women are under-represented. In order to build and sustain a pipeline of diverse talent, businesses need to work together to encourage girls at young ages through initiatives such as Tech She Can.’
PwC research suggests fewer female jobs are expected to be lost due to technology relative to jobs lost for the male population in the OECD, but the gains from job creation are likely to be bigger for men than women. The health and social care sector, the largest employer of women in the OECD, is expected to experience a net increase in female employment as a result of technology. However, the wholesale and retail trade and manufacturing sectors in the OECD are expected to experience a net decrease in female employment as a result of technology.