A Report into the Ethnic Diversity of UK Boards

Sir John Parker The Parker Review Committee

Final Report 12 October 2017

In association with Beyond One by ‘21 Contents

Members of the Steering Committee Ministerial Foreword 2 Chair: Sir John Parker GBE, FREng A Welcome Letter from Sir John Parker 4 Co-Chair: David Tyler Executive Summary 6 Members: Trevor Phillips OBE Recent Developments: From Consultation to Implementation 12 Helen Mahy CBE Ken Olisa OBE The Background to the Parker Review 20 Amy Winepress, EY An Introduction: Ethnic Diversity of UK Boards 24 Tom Shropshire, Linklaters LLP An Analysis of Ethnic Diversity in UK Boards 28 Yvonne Thompson CBE Increasing the Ethnic Diversity of UK Boards – The Commercial Case 32 Neil Carberry, CBI Sanjay Bhandari, EY Increasing the Ethnic Diversity of UK Boards – Finding the Talent 38 Shabbir Somani, EY Approach to Recommendations 44 Parker Review Recommendations 46 Expert Advisers Appendices 50 Professor Susan Vinnicombe CBE, Appendix A: Questions for Directors 51 Cranfield School of Management Appendix B: The Directors’ Resource Toolkit 53 Dr Doyin Atewologun, School of Business & Appendix C: Case Studies 58 Management, Queen Mary University of London and Visiting Fellow, Cranfield School of Management Appendix D: Methodology 67 Biographies 68 Observer Itiola Durojaiye, Department for Business, Energy & Industrial Strategy

Acknowledgements Essential to the effective functioning of any Board is dialogue which is both constructive and challenging… CBI Department for Business, Energy & Industrial Strategy One of the ways in which constructive debate can be EY encouraged is through having sufficient diversity on the Green Park Executive Recruitment Board. This includes, but is not limited to, gender and Institute of Directors race. Diverse Board composition in these respects is Linklaters LLP not on its own a guarantee. Michael Eboda Tulchan Communications Diversity is as much about differences of approach Webber Phillips and experience, and it is very important in ensuring effective engagement with key stakeholders and in order to deliver the business strategy.”

The Financial Reporting Council (April 2016)

2 Building an inclusive and diverse workplace to our economic well-being. Sir John’s report which draws on the talents of all of our people, also emphasises the importance of leadership is vital to the UK Economy and is a key part at the highest level of business, as well as of our Industrial Strategy. If companies are brand, culture, talent and the supply chain. not recruiting from the whole of society, then they are missing out on talent. I would like to thank Sir John and his steering group for leading this work and for The UK labour market is thriving, with more championing this very important agenda. people in work than ever before. Whilst we are proud of this, Sir John Parker’s report shows Our success in improving gender diversity shows that there is a great deal more that needs to be how embedded cultures can change when done to ensure that ethnic minorities are able to business addresses the challenge. I encourage participate fully at senior levels of UK business. companies to act on the recommendations set out in the report and I am optimistic that As we see from the report, UK citizen directors with strong leadership from business we of colour represent only 2% of directors in will see real progress in improving ethnic FTSE boardrooms, a small fraction of the diversity in boards over the next few years. proportion of the population that has an Ministerial ethnic minority background. It is clear that the boardrooms of Britain’s leading companies do not currently reflect the ethnic diversity of either the UK or their key stakeholders, including Margot James MP customers, suppliers and employees, that are Minister for Small Business, Consumers Foreword critical to the future of their businesses. and Corporate Responsibility It is important that people are able to work in a workplace where differences are embraced, whether they are differences of race, gender, Margot James MP, Minister for social background, sexuality, age or even Small Business, Consumers and differences of perspective and personality. Sir John has clearly laid out the commercial Corporate Responsibility case for having a diverse board. As well as contributing to a fairer society, an inclusive environment helps employees to perform at their best. It increases productivity and contributes

2 A Report into the Ethnic Diversity of UK Boards 3 Increasingly they want to be assured that the I am grateful to all of my Review Committee composition of our Boards not only includes colleagues for their unstinting voluntary the best range of talent, skill sets and relevant service. My thanks, in particular, to Trevor experience available to us, but that they also Phillips for his valued and wise counsel and broadly reflect those we serve and those input partly based on his former experience who work as part of our companies. as Chairman of the Commission for Racial Equality, to Amy Winepress as Secretary and UK companies have made great progress Coordinator of the Steering Committee for on gender diversity but we still have much her valued support, and to Tom Shropshire for to do when it comes to ethnic and cultural his fine efforts to help finalise the Report. diversity as a business imperative. I want to extend our special appreciation to Many of us in business would attest that our the Partners of EY and latterly Linklaters for experience on Boards that embrace gender and their funding and support without which this ethnic diversity benefit in their decision making Report could not have been completed. I by leveraging off the array of skills, experiences am also grateful to Tulchan Communications and diverse views within such a team. for their advice and support.

In the UK, our talent pool is changing as the Finally, I would like to thank all of the people composition of our society changes along with and companies that took time to provide us with our customer base at home and overseas. The valuable feedback during the consultation period. databases of a number of executive search firms I was heartened to see the widespread support demonstrate that a range of ethnically diverse for the recommendations and the importance that eligible candidates, who could be considered enhancing diversity in our Boardrooms could have for a number of job specifications in the in the future success of the UK. Given the changes Boardroom, are available now. As time passes, occurring in the world, and here within the UK, this pool of talent will be enhanced and grow. it has only become more essential that we keep our companies prepared for new social, political Based on my experiences as a member of and economic realities. Leadership comes from all Lord Davies’ review of “Women on Boards”, levels within an organisation, but leadership, both I am confident that by setting out practical in word and deed, is essential in the Boardroom, A Welcome issues and coming up with aspirational and and I look forward to seeing changes in that realistic objectives and timescales, progressive environment that will continue to keep corporate business leaders will respond and act. Britain at the forefront of global business.

I trust Boards will see our recommendations as “business friendly” reminding us of our need to Letter from Sir continue to earn our licence to operate in society and as an initiative to align our Board composition more broadly with our customer base. Those of us Sir John Parker GBE, FREng that have been on the journey with more diverse multi-ethnic (male and female) and multi-cultural John Parker Boards have found the journey not only rewarding, but less daunting than some might see it.

In this review, we set out a series of We business leaders know that we cannot recommendations for your consideration, which we hope will engender fruitful debate within the operate successful enterprises without the business community in particular. We also hope that our Boardroom recommendations will be support of our many stakeholders, including considered alongside the review of ethnic diversity and the labour market that was led by Baroness our customers, shareholders and employees. McGregor-Smith and published in February 2017.

4 A Report into the Ethnic Diversity of UK Boards 5 An Examination of the FTSE 100: Understanding and responding to cultural and demographic change is a major commercial imperative both in the UK and globally. We must 1,050 director positions in total all recognise, business included, that the UK has changed dramatically over the past 40 years: UK citizen directors of colour represent only • Today, approximately 14% of the total about 2% of the total director population UK population is a “person of colour”, or from a “non-white” ethnic group1 85 individual directors of colour – up from just over 2% in 1971.

(four hold two Board positions) • By 2030, it is expected that the proportion will be closer to 20% of the total UK population.2 Total directors of colour represent about 8% of the total (compared to 14% of the • By 2051, it is expected that the proportion of people of colour in the UK will reach to UK population) over 30% of the total UK population.3

51 out of the FTSE 100 companies do not • Between 2015-2050, one-half of the Executive world’s population growth will be have any directors of colour concentrated in nine countries, five of which are in Africa and three in Asia.4 Seven companies account for over 40% of the directors of colour • The FTSE 100 derives more than 75% of its sales from outside the UK, and for the Summary 5 FTSE 250 that proportion is over 50%. Five out of the seven companies have headquarters historically located Understanding the imperatives around this issue, from the perspectives of both the companies and A Report into the Ethnic Diversity of outside the UK the target individuals is key to finding a long-lasting solution to Boardroom and pipeline deficit we UK Boards: “Beyond One by ‘21” Only six people of colour hold the position are seeking to address. The Steering Committee of Chair or CEO believes that it is important that FTSE 100 and FTSE 250 companies change the way they approach the issue of ethnic diversity in the Boardroom and the Data as of end-July 2017 pipeline, and that despite the efforts being made, in many cases they cannot be seen to be successful The Current State of Affairs or sufficient. For example, on page 42 of this Report, the observations made by respondents We believe that in order for corporate Britain in the Harvey Nash research are instructive. As a general matter, the Boardrooms of Britain’s to reflect the progress that is being made in leading public companies do not reflect the ethnic diversity, equality and inclusion generally, Our Review highlights clear business reasons diversity of either the UK or the stakeholders that changes are needed in the Boardrooms where for increasing ethnic diversity on UK Boards they seek to engage and represent. This Report leadership, stewardship and corporate ethics and, of course, alongside the business drivers, highlights that ethnic minority representation are of utmost importance. However, the thoughtful and responsible Nomination in the Boardrooms across the FTSE 100 is recommendations we are making are underpinned Committees will no doubt wish to reflect on disproportionately low, especially when looking by strong industrial logic and the need for UK the social and ethical aspects of ensuring the at the number of UK citizen directors of colour. companies to be competitive in the increasingly composition of their Boards reflects the make-up challenging and diverse marketplace. of society and their important constituencies.

1 We accept that no noun/group of nouns would be perfectly suitable and use the broad term “people of colour” to capture individuals with evident heritage from African, Asian, Middle Eastern and South American regions. Thus, the focus in this Report is on “non-white” directors. 2 “Older BME People and Financial Inclusion Report: The future ageing of the ethnic minority population of England and Wales”, Nate Lievesley, Runnymede Trust and the Centre for Policy on Ageing (July 2010). 3 Id. 4 United Nations Department for Social and Economic Affairs [http://www.un.org/en/development/desa/news/population/2015-report.html] (Jul. 2015). 5 Report by Capital Group (2013).

6 A Report into the Ethnic Diversity of UK Boards 7 Key Business Drivers

Internal Benefits

Inclusive Leadership & • A Board capable of drawing on a range of Avoiding “Group-Think” thought, experience & expertise

• A Board that can engage with an increasingly diverse range of stakeholders

Corporate Culture • A Board that reflects a company’s commitment to diversity

• A Board that reflects the breadth of a company’s ambitions, including those of its employees, customers & communities

External Benefits

Brand Value • A Board capable of enhancing & protecting the corporate brands by acting consistently with articulated corporate culture & values

• A Board that reflects the fact that sales of FTSE companies are made increasingly outside the UK & consumers want to align themselves with brands that reflect their priorities

Recruitment • A Board committed to identifying, attracting, retaining & promoting the best talent, irrespective of the gender, ethnic background, religion or other defining characteristic of any candidate

• A Board that can develop the global talent pool into corporate leaders capable of delivering on the long-term strategy of the company

Supply Chain • A Board that is capable of appreciating & managing risks associated with global resourcing, which invariably requires an understanding of cultural sensitivities, norms & vulnerabilities

We do not believe that it matters whether successful corporate leadership needs to the changes we recommend are understood benefit from diversity of thought and improve through the lens of changing demographics, decision-making. Each and all of these elements the recognition by key stakeholders (including may be reason enough to change on their own; governments, shareholders, employees and however, when taken together, the case for consumers) that companies should reflect change becomes more clear and compelling. valuable societal and cultural norms, or because

8 A Report into the Ethnic Diversity of UK Boards 9 Parker Review Recommendations Implementing Change

We believe that now is the time to begin making Looking at all people of colour on the Boards of 2.3. Companies should encourage and support Based on the current rates of turnover amongst changes that will evolve the face of corporate FTSE 100 companies (regardless of nationality), candidates drawn from diverse backgrounds, FTSE 100 directors, we estimate that to reach an Britain and better prepare UK companies to at the end of the first half of 2017, there were only including people of colour, to take on ethnically diverse mix similar to that of the overall continue to be global leaders in business over the 85 individual directors who are people of colour Board roles internally (e.g., subsidiaries) adult working population by 2021 (approximately longer term, benefitting from greater diversity of (comprising approximately 8% of the total available where appropriate, as well as Board and 15%), just one in five new Board appointees would experience, expertise and thought as a result. positions) – over 40% of which are drawn from trustee roles with external organisations need to be a person of colour. In practice, taking seven individual companies, five of which have (e.g., educational trusts, charities and other into account typical Board appointment cycles, Our recommendations are as follows: been historically headquartered outside of the UK. not-for-profit roles). These opportunities that would mean that (on average) each FTSE 100 Fifty-one companies within the FTSE 100 had no will give experience and develop oversight, company would need to appoint one minority 1. Increase the Ethnic Diversity of UK Boards directors of colour, and from a seniority perspective, leadership and stewardship skills. director in the period to 2021. By comparison, at only six individuals who held the position of Chair the time of its establishment, the target set out by 1.1. Each FTSE 100 Board should have at or Chief Executive Officer are people of colour. We recognise that organisational change the Davies Review necessitated (on average) one least one director of colour by 2021; and must begin at the top. Stewardship, mentoring in three new director appointees to be female. each FTSE 250 Board should have at We note, with appreciation, the changes and sponsorship are essential components in least one director of colour by 2024. made to the Standard Voluntary Code of professional development and progression. The timeframe suggested to meet these Conduct in response to our recommendations recommendations are relatively longer than 1.2. Nomination committees of all FTSE 100 and in the Consultation Version. We look forward Without the appropriate commitments from that given to business in the context of the FTSE 250 companies should require their to seeing these being implemented. existing Chairs, Boards and executives, UK Davies Review, and we believe that the overall human resources teams or search firms (as companies will not attract, develop and retain task is capable of being achieved before then. applicable) to identify and present qualified In order to help UK companies enhance the ethnic the best talent, whatever their background We believe that the right approach will be to people of colour to be considered for Board diversity of their Boards, we have developed the and wherever they may be located. update the assessment of the overall progress appointment when vacancies occur. “Questions for Directors” set out in Appendix A and that has been made at the end of 2021. the “The Directors’ Resource Toolkit” set out in We encourage companies to establish 1.3. Given the impact of the “Standard Voluntary Appendix B to help existing Boards deliver on the objectives for the development of their respective Code of Conduct” for executive search firms recommendations of this Report. pipelines and to record and track progress in the context of gender-based recruitment, against those objectives, and report these we recommend that the relevant principles 2. Develop Candidates for the matters to their Boards on a regular basis. of that code be extended on a similar basis Pipeline & Plan for Succession to apply to the recruitment of minority 3. Enhance Transparency & Disclosure ethnic candidates as Board directors of 2.1. Members of the FTSE 100 and FTSE 250 FTSE 100 and FTSE 250 companies. should develop mechanisms to identify, 3.1. A description of the Board’s policy develop and promote people of colour on diversity should be set out in a We recognise that qualified and credible within their organisations in order to ensure company’s annual report, and this candidates can come from a variety of over time that there is a pipeline of Board should include a description of the backgrounds, genders and nationalities. capable candidates and their managerial company’s efforts to increase, amongst This Review does not seek to mandate where and executive ranks appropriately reflect the other things, ethnic diversity within its candidates are drawn from, as this will need importance of diversity to their organisation. organisation, including at Board level. to be considered carefully by each company given its strategic needs and ambitions. 2.2. Led by Board Chairs, existing Board directors 3.2. Companies that do not meet Board of the FTSE 100 and FTSE 250 should composition recommendations by However, we believe it is important to highlight mentor and/or sponsor people of colour the relevant date should disclose in that only about 2% of all FTSE 100 Board directors within their own companies to ensure their their annual report why they have not are UK citizen people of colour. This compares readiness to assume senior managerial been able to achieve compliance. with people of colour comprising approximately or executive positions internally, or non- 14% of the overall population in the UK. executive Board positions externally. We believe that the support of Government and regulatory bodies is essential to achieving progress in all aspects of diversity and social mobility, including increasing the representation of people of colour in decision-making and leadership roles in corporate Britain.

10 A Report into the Ethnic Diversity of UK Boards 11 1.1 The consultation version of this Report was Feedback published in November 2016, and was launched at an event at the offices of EY in 1.3 In the consultation version and at the launch London. The launch event was well attended event, there was a request for feedback by a cross-section of interested parties and regarding the Report, its findings and stakeholders, including representatives of the recommendations set out therein. the UK government, industry and the media.

1.4 Since the launch event, the Steering 1.2 At the launch of the Report, Rt. Hon. Committee has received 25 pieces of Margot James MP fully endorsed the Report written feedback regarding the report, and its recommendations, underscoring and has engaged with a range of different its importance by stating that: stakeholders on an informal basis. These stakeholders include: Chairs, Non- Executive Directors, senior executives and other members of management [the Report’s findings highlight that Board from a range of companies, including those in the FTSE 100 and FTSE 250; composition does] … not reflect the society we representatives of executive search firms live in. Nor … reflect the international markets and recruitment professionals; members of the Department for Business, Energy and in which FTSE companies operate. Industrial Strategy Committee inquiry on UK corporate governance); representatives We are missing voices and perspectives. of the Information Commissioner’s Office; representatives of the Financial So many people are being denied Reporting Council; and representatives opportunities that should be available to them. of interested communities, including the Equality and Human Rights Commission. 1 It is not right that boardrooms in 2016 can still be predominantly male and exclusively white… 1.5 As a general matter, the feedback on the consultation version was overwhelmingly positive, with many stakeholders offering Businesses need to recruit the best person for constructive suggestions to make the the job if they are going to compete in today’s recommendations more impactful.

economy, and people from all backgrounds 1.6 A summary of the core pieces of written should be given the equal opportunities feedback received through the consultation Recent is set out below in greater detail, much to contribute. of which was also consistent with the informal oral feedback obtained by various Because in business as in politics we are selling representatives of the Steering Committee. Developments: ourselves short if we don’t seek out people 1.6.1 Most commentators felt that the scope from different backgrounds. Sir John’s report of the Recommendations should not be restricted to the FTSE 350 sets out the commercial case for this very well, and should be applicable across all covering improvements to leadership, brand, companies in the UK since diversity is of fundamental importance for From Consultation culture, talent and the supply chain.” all. In addition, there was a desire to see the Recommendations adopted across the Third Sector and the Public Sector, as they should be seen to be taking the lead on inclusion to Implementation and diversity, and also have a role to play in preparing candidates for roles in commercial organisations.

12 A Report into the Ethnic Diversity of UK Boards 13 1.6.2 In addition, the Steering Committee 1.6.6 The matter was discussed extensively companies had an obligation to ensure received feedback from investors, as by the Steering Committee, and its such a pipeline was being developed well as from other interested parties, view has consistently been that the within their own institutions. That noting that shareholders have an terminology used in the Report should was also recognised as an on-going important role to play with respect both be seen as adequately defining challenge by many, and development to enhancing diversity within the and also wholly inclusive for a global of a broad and deep pool of suitable FTSE 100 and 250, including in their audience, given the composition of candidates will take time. There was Boardrooms. In that context, there the FTSE 100 and FTSE 250. Certainly, also a recognition in the informal were a number of commentators that there may be alternatives to “people of feedback that many companies and supported the Steering Committee colour”, and in some commentators’ executive search firms had not done encouraging investors to be more eyes, possibly preferable. However, enough yet to identify the existing active in that regard and to engage each of the terms suggested, while pool of qualified candidates. fully with Board Chairs and senior broadly recognised, either do not executives to emphasise the capture a broad enough group of 1.6.10 There was overwhelming support importance of having access to, and people or are so identified with for mentoring and sponsorship at incorporating within their respective particular strands of diversity in the the senior levels of the organisation, companies, a diverse pool of talent UK as to not present as sufficiently including by the Chair and other throughout the organisation, including inclusive. The Steering Committee’s Non-Executive Directors, but it was at the most senior end. The Steering view is that the terminology is a minor also widely recognised that it was Committee agrees with the sentiments part of the discussion, adequately essential for everyone in the company expressed by those commentators conveys the meaning necessary for to drive inclusion and diversity and and urges shareholders and other the Report and is sufficiently well- to develop the pipeline. There was investors to engage with Board Chairs, understood for the Recommendations also a view expressed that the Report non-executive directors and other to be implemented. should also highlight the importance senior executives on the importance of that unconscious bias training, “role inclusion and diversity to the company 1.6.7 Commentators felt that a Company’s models” and “reverse mentoring” and its success. We also believe it is nomination committee had a key role can play in the development of talent. wholly appropriate for investors to to play in driving inclusion and diversity Further information on mentoring is have due regard for the importance, within the organisation, and it was contained in the Directors’ Toolkit both in word and in action, that suggested that the FRC should clarify in Appendix B of this Report. companies have to the importance the role and remit of the nomination of inclusion and diversity to their committee and its Chair in relation 1.6.11 Many commentators noted the organisations – particularly given the to diversity and board appointments importance of transparency and importance to the short, medium and and disclosure requirements in disclosure to ensure that progress long-term success of UK business. corporate annual reports. gets appropriately monitored. The feedback in that regard was clear 1.6.3 While the targets for both FTSE 1.6.8 Commentators all agreed that about the idea that “what gets 100 and FTSE 250 companies were executive search firms had a key role to monitored, gets done.” However, widely supported and endorsed, play in increasing the ethnic diversity there was not a uniform view about there were some commentators that in UK Boardrooms. They noted whether such reporting should be expressed a view that the targets that engaging with, and bringing mandatory or voluntary, although a were not stretching enough and/or appropriate pressure to bear, on number believed that it should be that having a date for achievement executive search firms had worked mandatory. Most commentators was not helpful. In particular, one for enhancing gender diversity on raising the point believed that there commentator felt that companies Boards, and therefore, it seemed should be meaningful disclosure about should set their own strategy in this 1.6.5 There were questions and objections sensible to extend the rationale and the inclusion and diversity strategy and regard depending on what was realistic raised regarding the usage of the commitments to cover ethnic diversity. policies within corporate disclosure, for them and their starting point. term “people of colour” and the It was also noted that there were such as annual reports. There was other derivatives of that in the Report. additional considerations under the a clear view that it is important for While most accepted that it was Data Protection Act 1998 and Equality companies to explain the benefits of 1.6.4 Virtually all feedback (formal and difficult, if not impossible, to use Act 2010 that must be managed, diversity and convey the link between informal) endorsed the voluntary nature a term that was all encompassing, and greater clarification from the UK its diversity policy and its strategy and of the Recommendations; however, many did not easily recognise the use Government would be welcomed. footprint. Commentators were clear in also understood that change was of that terminology, and suggested their view that the focus should be on required and, in the event of no real using terms or acronyms that had 1.6.9 There was widespread endorsement the strategic imperative of the Board, progress, mandated change may result. wider resonance in the UK, such as for the points in the Report regarding and a description and evaluation of the “BAME” (representing Black, Asian the necessity of building a pipeline practical activities being undertaken, & Minority Ethnic) or “Black British”. of qualified candidates, and that all rather than a “tick-box” exercise.

14 A Report into the Ethnic Diversity of UK Boards 15 1.6.12 A group of commentators also raised 1.10 The Steering Committee was unanimous For companies seeking a The revised Code should have the important role that investors play in its support and endorsement of the in this discussion and change initiative. findings and recommendations set out competitive advantage, the the issue of board diversity as a Commentators felt it was important in the McGregor-Smith Review. directors and non-executives key priority and there should be a to note that investors are increasingly running them, and those setting public explanation of the reasons seeking to align themselves with 1.11 The Steering Committee is also unanimous companies that reflect their beliefs, in its support of the initiative to create the the strategic context in which they why members are part of the board. values and priorities. In addition, Business Inclusion and Diversity Group, operate, should be empathetic The Code should require boards Chaired by Rt. Hon. Margot James MP, there was a recommendation that to the needs and requirements to cover in their annual reports the report include an explicit call which is comprised of, amongst others, on investors, given their role and Sir John Parker, Baroness McGregor- of all those involved, including information diversity on their boards pressure they can apply, to strengthen Smith and Sir Philip Hampton. employees, workers, suppliers and in the workforce, covering good corporate governance by 1.12 The Steering Committee would welcome improving Board diversity. and customers. It makes business diversity of gender, ethnicity, any progress that can be made to embed a culture of inclusion and diversity in all sense to recruit directors from as social mobility, and diversity The Review by Baroness Ruby UK-based organisations, whether public, broad a base as possible, across of perspective. Annual reports McGregor-Smith – “Race in the private or third sector. Furthermore, the the demographic of the UK. We should be required to include a Steering Committee believes that an Workplace” integrated and coordinated approach recommend that the FRC embeds narrative on the current position, to these issues is ultimately the best the promotion of the ethnic diversity and an emphasis on what steps 1.7 As noted in the consultation version, the approach to engage and support business of boards within its revised Code. the company has taken, and will work done by the Steering Committee across the UK, including those that was completed with the expectation comprise the FTSE 100 and FTSE 250. At the very least, we recommend continue to take to enhance the that the review being undertaken by that wherever there is a reference diversity of the executive pipeline, Baroness Ruby McGregor-Smith would be completed and published at a later date. Business, Energy and Industrial to gender, the FRC should include with agreed targets. This narrative Strategy Committee on Corporate a reference to ethnicity, so that the should include how accurately the 1.8 In February 2017, the McGregor-Smith Governance Reform Review, entitled “Race in the Workplace” issue of ethnic diversity on boards is board mirrors the diversity of both was published and contained a detailed made explicit in the revised Code, the workforce and the customer analysis of the issues faced by UK 1.13 During April 2017, a departmental committee and is given as much prominence as base. businesses in developing Black and established by the Department of Business, Minority Ethnic talent in the workplace. Energy and Industrial Strategy published gender diversity. The McGregor-Smith Review made several its report on corporate governance reform The detailed narrative of board recommendations to ensure that every in the UK (the “BEIS Report”), which … [W]e recommend that the diversity in annual reports should person, regardless of their ethnicity or supported the recommendations set out Government should legislate to be a working document throughout background, can fulfil their potential at work. in the consultation version of the Report. ensure that all FTSE 100 companies the year, informing the board, the 1.9 Without seeking to repeat the key findings of 1.14 In particular, the BEIS Report and businesses publish their Nomination Committee, middle and the McGregor-Smith Review, several of the stated, in relevant part: findings set out in that report are fundamental workforce data, broken down by senior managers, and the workforce building blocks for making the recommended ethnicity and by pay band. and other stakeholders, about the and necessary changes in Boardrooms across seriousness that companies are the UK, including an intensive examination …We support measures to enhance of recruitment, talent development and the taking diversity and succession the executive pipeline, ensuring creation of opportunities for an increasingly issues. The revised Code should diverse workforce. In particular, the emphasis that talented people within an make this requirement explicit.” on developing people from the outset to organisation are encouraged and build a strong pipeline of potential candidates for management and Board directorships supported at an early stage of their is at the core of our recommendations. careers, and beyond, into middle and senior management.

16 A Report into the Ethnic Diversity of UK Boards 17 1.15 The Steering Committee notes the findings 1.21 This number has decreased by nine 1.23 Certainly, the issue of enhancing ethnic and recommendations set out in the BEIS directors since the original research, which diversity within UK Boardrooms continues to Report, and looks forward to seeing the is reconciled as follows: net decrease of be a concern that needs specific attention, relevant changes being implemented by one director in companies which remain and the Steering Committee believes the FRC and by companies throughout in the FTSE 100; net decrease of nine that the findings and recommendations the UK. The Steering Committee believes directors of companies which are no longer made within the consultation version of that many of the other observations and in the FTSE 100 index; net decrease of five the Parker Review remain valid and the recommendations set out therein support directors of companies which are no longer case for change remains compelling. directly the findings of this Report. in the FTSE 100 index due to acquisition and corresponding de-listing. These 1.24 Therefore, the Recommendations reductions are offset by six directors of made in this final version of the Report Changes in the Composition colour sitting on the Boards of companies remain unchanged from those made of the FTSE 100 who are new entrants to the FTSE 100. within the consultation version.

1.22 Other key statistics have been 1.16 The Steering Committee has updated affected as follows: The Future of the Parker Review FTSE 100-related data to July 2017, which Steering Committee has resulted in certain changes to the analysis undertaken at the time of the On a like for like basis, the number of ethnic publication of the consultation version. 1.25 Given the timescales set out in the minority directors has decreased by one Recommendations, the Steering 1.17 As at the end of July 2017, there have been a person since the end of March 2016 Committee believes that it should number of changes to the FTSE 100, including remain intact throughout the relevant new entrants and recent departures. Directors of colour remain at 8% of the total period, at least through 2021. 1.18 Whilst some companies have improved number of directors in the FTSE 100 1.26 During that period, the Steering Committee in terms of more ethnic minority directors will meet at least annually to assess the being appointed since the end of March UK citizen directors of colour represent efforts being made and the progress being 2016, in many cases the “improvement” attained regarding the Recommendations. is driven by a result of changes to board approximately 2% of the total; an composition (i.e. the number of ethnic improvement driven by the reduction in 1.27 The Steering Committee and its members will minority directors stays the same but the the overall number of Board Seats available continue to engage with a range of relevant total number of directors on the board stakeholders and work with the Institute of reduces, thus increasing proportionality). within the FTSE 100 Directors to ensure that progress is being made and that suitable candidates are being 1.19 The total number of FTSE 100 directors Six directors of colour hold Chair or CEO prepared to assume Board roles in the future. has reduced since the end of March 2016, positions (a reduction of three since the as the average size of boards shrank. This 1.28 As noted in the Consultation Version of the has slightly improved the metric of the publication of the consultation version) Report, we are encouraging members of percentage of directors of colour as a the FTSE 100 and FTSE 250 to adopt the proportion of the number of directors of FTSE Seven companies still account for over Recommendations on a voluntary basis; 100 companies, although the real number however, should there be insufficient has dropped from 94 directors to 85. 40% of the directors of colour progress towards the goals on that basis, the Steering Committee may revise its approach 1.20 As at the end of July 2017, the total number 51 of the FTSE 100 companies do not have and endorse that the Recommendations (or of directors in the FTSE 100 has decreased relevant parts thereof) become mandatory. from 1,087 per the original research, to any directors of colour (improvement since 1,050. There are 85 directors of colour in original research statistic which was 53) this population. Taking into account four directors who hold more than one role, the total number of ethnic minority directors is 81.

18 A Report into the Ethnic Diversity of UK Boards 19 2.1 In recent years, attention to diversity in Board 2.5 The FRC’s announcement was welcomed leadership has been focused on the gender by industry groups, including Race for deficit on UK Boards, particularly through Opportunity, which was supported by the work of the Government-appointed Business in the Community, whose Chair, Review led by Lord Davies of Abersoch (the Adrian Joseph, latterly of EY, said at the time: “Davies Review”). The case, both commercial and moral, to remedy this deficit has attracted widespread backing from business leaders, not only in the UK, but globally. This announcement from the 2.2 However, the lack of other aspects of FRC is huge news from an diversity in the UK Boardroom has not gone unnoticed by the Government, establishment that has the the public or business observers. ability to effect fundamental 2.3 In 2014, several studies, notably those change in how organisations from Green Park Executive Recruitment operate. Currently, there are (“Green Park”) and the Race for Opportunity campaign group, demonstrated that major too few ethnic minorities in British companies appeared to have passed prominent leadership positions over a growing pool of talented minority leaders, it was asserted, to their own cost.6 across the majority of sectors in this country – and this is under- 2.4 In September 2014, the UK’s Financial Reporting Council (the “FRC”) announced reflective of the number of that it would consider adopting fresh ethnic minorities in work. 2 provisions in its corporate code to require narrative reporting on ethno-cultural diversity: Yet it is vital to have role models to help raise aspirations of our young ethnic minority people [K]ey to the effective functioning of any Board who are going to be a part of is a dialogue which is both constructive and our economic future. Giving The Background challenging. One of the ways in which such them aspiration and hope has debate can be encouraged is through having never been more important.” sufficient diversity on the Board, including gender and race. Nevertheless, diverse Board to the Parker composition in these respects is not on its own a guarantee. Diversity can be just as much about difference of approach and experience. The FRC is considering this as part of a review Review of Board succession planning and will consider the need to consult on these issues for the next update to the Code…”

6 See, “FTSE100 Leadership 10,000 Report”, Green Park (Feb. 2014) and “Race at the Top”, Race for Opportunity (Jun. 2014).

20 A Report into the Ethnic Diversity of UK Boards 21 2.6 These observations have also been made by the Government. In particular, in December 2014, speaking at a breakfast meeting held by the professional services firm EY, the then-Secretary of State for Business, Sir Vince Cable, urged UK business to build on its successful drive to increase gender diversity in Board leadership by drawing attention to the absence of minority ethnic leaders in our largest companies:

Black and ethnic minority representation on UK FTSE 100 Boards is currently at around 5%, which is much lower than we would expect if the company Boards reflected the population of this country… [I] want us to extend the successful campaign we have led to increase female representation on FTSE 100 Boards to tackle invisibility of ethnic minorities in Britain’s top companies.” 2.9 In late 2015, the then-Secretary of State 2.11 In December 2015 and February 2016, In addition, the Steering Committee 2.7 Sir Vince’s appeal was supported by for Business in the new Conservative Sir John and certain of his colleagues met met periodically and worked towards the then-Opposition spokesman on administration, Rt. Hon. Sajid Javid MP, Ministers to discuss aspects of the work to be finalisation of the Report. A summary of the Business, Rt. Hon. Chuka Umunna MP, affirmed the Government’s official support done. It was agreed that the “Parker Review” key developments over the period from who announced that, if elected, a Labour for the initiative and invited Sir John Parker to would undertake a wider consultation by the publication of the consultation version government would embark on a fresh review conduct an official Review. This work would Autumn 2016 to (i) explore why there is to the publication of this final Report is set of ethnic and cultural diversity on company also complement the investigation, to be an absence of ethnic diversity on Boards, out in Section 1 on pages 12-19 herein. Boards. Mr Umunna indicated that, led by Baroness Ruby MacGregor-Smith, (ii) suggest realistic and pragmatic ways into the progression of minority ethnic of increasing ethnic diversity on Boards groups in the labour market generally. and (iii) encourage businesses to adopt approaches which could be effective at 2.10 The composition of the Review Steering increasing ethnic diversity on Boards. [W]e have got to go further and Committee assembled by Sir John Parker is look at not just gender diversity set out earlier in this report. The Committee 2.12 Sir John and his colleagues have also met with met throughout 2015 through 2017. All members of the All Party Parliamentary Group but ethnic diversity in British members gave their time and contributions on Governance & Inclusive Leadership, business leadership.” on a voluntary basis. The Committee’s led by the Rt. Hon. Dawn Butler MP. work was supported organisationally by EY and research was undertaken by 2.13 Since publication of the consultation version 2.8 The Chair of Anglo American plc, Sir John Dr. Doyin Atewologun (Queen Mary of the Parker Review in November 2016, the Parker, who had been a member of the Davies University of London, School of Business Steering Committee has continued to engage Review, agreed with Sir Vince that during & Management; and Visiting Fellow, in discussions with various stakeholders 2015, he would build on Lord Davies’ work to Cranfield School of Management). The about the Report, the recommendations bring business leaders together to respond Board is grateful for the contributions made and the best ways to implement changes. to the challenge of ethno-cultural diversity. by the Institute of Directors and the CBI.

22 A Report into the Ethnic Diversity of UK Boards 23 3.1 This Review addresses a vital aspect of British certain that they are giving their support businesses’ competitiveness; and in so to businesses that demonstrate integrity, doing reflects on the prospects for the UK’s regard for the best values of our society continued prosperity in a global economy and a commitment to fairness. – an issue that is more important and more contested now than for many years. This 3.5 Sound corporate governance, transparent Report asks whether, in spite of our legacy as rewards policies, a commitment to one of history’s greatest trading nations, 21st the environment and fair employment century Britain is truly ready to take on the practices are just four examples of business best that the rest of the world has to offer. responsibilities that have in recent years swiftly moved from the “margins” to 3.2 British businesses are admired around the become priorities for business leadership. world for a number of reasons – integrity, flexibility, innovation and the quality of 3.6 There has been significant progress, and their leadership. As a consequence, during a pathway to greater progress, in one recent years, over 75% of sales made by aspect of diversity within UK Boardrooms FTSE 100 public companies have been – gender. We applaud the efforts that have derived from trade outside the UK, and over been made in that regard, and believe that 50% of the sales made by the FTSE 250.7 continued efforts are needed to make lasting change throughout corporate Britain. 3.3 Clearly, both the domestic UK market and global markets are of fundamental 3.7 However, without wanting to detract 3 importance to the success of Britain, as has from the efforts that have been made in been the case for generations. The issue that regard, the term “diversity” is not at hand is whether corporate Britain can solely limited to gender, but also includes continue to adapt to and capitalise upon many aspects of the human condition. market changes and demographic shifts in order to retain its position at the vanguard of 3.8 For the purposes of this Report, we have international commerce and development, been asked to focus on ethnic diversity, but as well as continue to be a leading global many of the observations, learnings and investment destination. This has only recommendations can apply more broadly. An Introduction: become more important in recent times, The fundamental point that is being made given the future changes, uncertainties and by any of these Reviews (whether the Davies opportunities that will present themselves Review or this one) is that the leadership of as a result of the decision for the UK to UK companies needs to be more inclusive leave the EU. It is essential that the future and open in the future. In that regard, the Ethnic Diversity success of the UK be underpinned by a Steering Committee is firmly of the belief that capable, skilled and diverse workforce. the creation of truly inclusive environments Only in that way will leading global within UK businesses will have a dramatic and companies still see the UK as the best place positive effect on these companies’ efforts to operate and grow their businesses and to becoming more diverse, and therefore of UK Boards attract the talent they need and desire. stronger, organisations. The Steering Committee believes achieving that will be 3.4 Stakeholders have become more key to maintaining the competitiveness sophisticated and discerning in their of corporate Britain and to securing the views about global business and its long-term commercial success of the impacts. An increasingly large and companies that call Britain home. effective set of stakeholders want to be

7 See footnote 5.

24 A Report into the Ethnic Diversity of UK Boards 25 3.9 The facts relating to gender contained 3.13 As the FRC noted in its report on Corporate in the Davies Review and many similar Culture and the Role of Boards (July 2016) studies painted a stark picture, and so (the “Corporate Culture Report”): do the facts relating to the lack of ethnic diversity in the UK Boardroom.

3.10 There is undoubtedly a myriad of business- related reasons for the deficit that these [T]he role of the [director] is changing, numbers suggest, including that for many years UK business may have had a with inevitable implications for the skillset, narrower set of strategic ambitions and, diversity and experience that [directors] will therefore, fewer stakeholders to engage. add to the Board in the future. Certainly, 3.11 However, we must also recognise that British [directors] will need to become more society has evolved over that time, and the demographic make-up of the country and culturally aware, more tuned in and more the markets being served by its businesses knowledgeable about human behaviours have become more diverse rather than less. In addition, societal norms and pressures and relationships.” have changed over time, and what was once acceptable and commonplace is no longer so. We must also recognise the increasing 3.14 This Report seeks to help Boards prepare importance that technology and technology for the future and, in doing so, develop a companies will play in securing the success pathway to address a crucial issue that has of British industry in the future. Certainly, for moved rapidly up the agenda of many key those companies, success will depend on constituencies, including business leaders, having access to, and attracting, a diverse regulators and politicians – the apparent and talented workforce. It would follow that deficit of ethnic and cultural diversity the people managing those firms in the future in the leadership of UK businesses. will also be successful managing and capable of reflecting that diversity. The Steering Committee notes that the importance of creating inclusive and diverse cultures has come to the forefront in recent months, and the Committee expects that scrutiny to only become greater, not only in the US, but also the UK and across the rest of Europe.

3.12 UK businesses are not immune to these demographic changes or associated market forces, and neither do we expect that UK business leaders believe that they are either.

26 A Report into the Ethnic Diversity of UK Boards 27 4.1 The single most important and influential 4.6 Although it is outside the scope of this group of public companies in the UK is Report, we would welcome consideration quoted in the FTSE 100 Index. There are of the risks and benefits of reporting of other significant enterprises outside this ethnic minority employee, executive index, but collectively these companies leadership and Board-related data set trends by virtue of their value, number commensurate with that mandated for of employees and public visibility. As of gender in UK public companies. We believe August 2017, the FTSE 100 was comprised of that the lack of publicly available data in companies with a total market capitalisation this regard may present an unnecessary £1.9 trillion.8 FTSE 100 companies also hurdle in tracking progress and being have a disproportionate impact on other fully transparent to all stakeholders. companies in the UK and globally by virtue of their global operations, vast supply 4.7 Key Findings chains and procurement activities. We have therefore, for the purpose of this analysis, 4.7.1 The research has revealed focused our research on the members of the following key data: the FTSE 100 at the end of July 2017. An Examination of the FTSE 100: 4.2 The study of the FTSE 100 was undertaken by EY and Dr. Doyin Atewologun (Queen 1,050 director positions in total Mary University of London, School of Business & Management; and Visiting Fellow, Cranfield School of Management) UK citizen directors of colour represent only who conducted most of the research on about 2% of the total director population gender diversity for the Davies Review.

4.3 The Steering Committee requested that 85 individual directors of colour 4 the research identify FTSE 100 directors of (four hold two Board positions) Black, East Asian, Latin American, Middle Eastern or South Asian ethno-cultural backgrounds (i.e., “non-white” directors). Total directors of colour represent about 8% of the total (compared to 14% of the 4.4 Based on the composition of the FTSE UK population) 100 as at the end of July 2017, 1,050 Board positions were analysed from the perspective of ethnic diversity. Since UK companies 51 out of the FTSE 100 companies do not An Analysis of are not required to report on the ethnic have any directors of colour diversity of their Board, employees or suppliers, information had to obtained from other sources and based on information Seven companies account for over 40% Ethnic Diversity that was publicly available at the time.9 of the directors of colour 4.5 While there may be potential for discussion about whether an individual is or considers Five out of the seven companies have themselves to be of a minority ethnic headquarters historically located background, we are confident that the outside the UK in UK Boards principal observations remain valid given the small number of directors of colour relative to the entirety of the population. Only six people of colour hold the position of Chair or CEO

Data as of end-July 2017

8 “FTSE Russell Factsheet” as at 31 August 2017. 9 For further information regarding the methodology used in the Review, please see “Appendix D: Methodology”.

28 A Report into the Ethnic Diversity of UK Boards 29 Company Total Ethnic Minority Company Total Ethnic Minority Company Total Ethnic Minority 4.8 Overall Representation of Directors Directors Directors Directors Directors Directors Directors of Colour in the FTSE 100

Fresnillo PLC 12 9 Marks & Spencer Group PLC 11 1 SSE PLC 9 - 4.8.1 Based on the composition of the FTSE 100 as at the end of July 2017, the Antofagasta PLC 11 8 Reckitt Benckiser Group PLC 11 1 Taylor Wimpey PLC 9 - table on the following page sets out Unilever PLC 13 5 Schroders PLC 11 1 BAE Systems PLC 10 - the total number of directors on the respective Boards and the number of Randgold Resources Ltd 8 3 Smith & Nephew PLC 11 1 Direct Line Insurance Group PLC 10 - directors of colour on such Boards. Standard Chartered PLC 13 4 Barclays PLC 12 1 Hammerson PLC 10 - The table has been ranked based on the number of directors of colour Old Mutual PLC 12 3 BHP Billiton PLC 12 1 Johnson Matthey PLC 10 - that each respective company had.

WPP PLC 12 3 Compass Group PLC 12 1 Land Securities Group PLC 10 - Although we have not conducted a similar analysis Mediclinic International PLC 10 2 National Grid PLC 12 1 Legal & General Group PLC 10 - of the FTSE 250, we would not expect to see marked improvement in the overall picture, and, AstraZeneca PLC 11 2 Royal Dutch Shell PLC 12 1 Next PLC 10 - in fact, would expect that the representation of people of colour continues to be challenged. Diageo PLC 11 2 Wolseley PLC 12 1 Paddy Power Betfair PLC 10 -

Anglo American PLC 12 2 Rolls-Royce Group PLC 13 1 RELX Group PLC 10 - Certainly, regional demographic disparities may exist for companies based outside of London HSBC Holdings PLC 18 3 Shire PLC 13 1 RSA Insurance Group PLC 10 - (which may be particularly relevant in the FTSE 250); however, the pool of available minority British American Tobacco PLC 13 2 Vodafone Group PLC 13 1 Whitbread PLC 10 - ethnic candidates will certainly be sufficiently Coca-Cola HBC AG 13 2 Prudential PLC 15 1 Babcock International Group PLC 11 - spread or mobile to compensate for that potential issue, irrespective of whether such candidates Morrison (Wm) Supermarkets PLC 7 1 Royal Bank of Scotland Group PLC 16 1 Burberry Group PLC 11 - are travelling within the UK or from abroad.

ITV PLC 8 1 Scottish Mortgage Investment Trust PLC 6 - Experian PLC 11 - 4.9 An Analysis of Gender and Ethnicity Sage Group (The) PLC 8 1 TUI AG 6 - Imperial Brands PLC 11 - 4.9.1 Of the 85 total directorships, 37 Worldpay Group PLC 8 1 Hargreaves Lansdown PLC 7 - International Consolidated Airlines Group SA 11 - positions are filled by women (three of whom hold two positions each). Ashtead Group PLC 9 1 3i Group PLC 8 - London Stock Exchange Group PLC 11 - This constitutes nearly 44% of the ConvaTec Group PLC 9 1 Glencore PLC 8 - Rio Tinto PLC 11 - positions held by directors of colour. We found it interesting to note that G4S PLC 9 1 Royal Mail PLC 8 - SKY PLC 11 - where multiple directorships are held by directors of colour, in most Kingfisher PLC 9 1 Admiral Group PLC 9 - St James's Place PLC 11 - instances they were held by women. Merlin Entertainments PLC 9 1 Associated British Foods PLC 9 - Aviva PLC 12 - 4.9.2 It is clear that the recent emphasis on Sainsbury (J) PLC 9 1 Barratt Developments PLC 9 - British Land Co PLC 12 - gender diversity in the UK Boardroom has not benefitted women of colour United Utilities Group PLC 9 1 Bunzl PLC 9 - Centrica PLC 12 - to the same extent as it has women GKN PLC 10 1 Croda International PLC 9 - CRH PLC 12 - who are not ethnic minorities. Of the appointments made following InterContinental Hotels Group PLC 10 1 DCC PLC 9 - Lloyds Banking Group PLC 12 - the Davies Review, a relatively small number of those Board positions Intertek Group PLC 10 1 easyJet PLC 9 - Smurfit Kappa Group PLC 12 - have gone to women of colour. Provident Financial PLC 10 1 Informa PLC 9 - Standard Life PLC 12 -

Pearson PLC 10 1 Micro Focus International PLC 9 - Tesco PLC 12 -

SEGRO PLC 10 1 Mondi PLC 9 - BP PLC 13 -

Smiths Group PLC 10 1 Persimmon PLC 9 - BT Group PLC 13 -

Carnival PLC 11 1 Rentokil Initial PLC 9 -

GlaxoSmithKline PLC 11 1 Severn Trent PLC 9 -

30 A Report into the Ethnic Diversity of UK Boards 31 5.1 Our Review highlights clear business 5.3 We summarise key commercial reasons for increasing ethnic diversity on drivers below UK Boards and we acknowledge that the current appetite for increasing diversity 5.3.1 Inclusive Leadership & differs for each company. However, we Avoiding “Group-Think” believe there are clear internal and external benefits that can be gained by a company As stated by the FRC in the UK that embraces our recommendations, Corporate Governance Code beyond the enhanced ability for the (April 2016) (the “Code”): Board to fulfil its statutory duties.

The Steering Committee is of the firm belief that the commercial rationale for making UK business more inclusive and also more [E]ssential to the effective diverse (including ethnically diverse) is clear, functioning of any Board and the future of talent acquisition and retention depends on getting these issues is dialogue which is both right. It has become increasingly clear that constructive and challenging. access to talent, combined with access to capital, is fundamental to a company’s The problems arising from long-term success – and ensuring that the “group-think” have been UK is a significant and deep source for both is fundamental to securing its position exposed in particular as a result as a leader in the global economy. of the financial crisis. One of

5.2 As the FRC stated in its the ways in which constructive 5 Corporate Culture Report: debate can be encouraged is through having sufficient Increasing the diversity on the Board. This Companies are recognising the value in defining includes, but is not limited and communicating a broader purpose beyond to, gender and race. Diverse Ethnic Diversity of profit which generates wealth and delivers Board composition in these benefits to society as a whole. This can help respects is not on its own create shared goals, motivate employees and a guarantee. Diversity is as build trust with customers... much about differences of UK Boards – The approach and experience, and What matters is that the culture is appropriate it is very important in ensuring for the context in which the company is effective engagement with key Commercial Case operating and that there is internal alignment stakeholders and in order to between company purpose, values, strategy deliver the business strategy.” and business model(s). Aligning business decisions with purpose and values and focusing on how financial targets will be achieved, will over the long-term lead to more sustainable value creation.”

32 A Report into the Ethnic Diversity of UK Boards 33 We suspect that all leaders of global With those commitments having corporations would agree that the been made, we believe that Boards markets in which they are operating should consider the role that inclusion are becoming more complex, and diversity play within their interconnected and require different organisations more broadly. Without skills to manage than would have speaking to all aspects of diversity, been the case historically. As we have certainly their statements around noted, over 75% of sales of the FTSE corporate values and ambitions 100 are derived from outside the UK10, should include careful consideration and, therefore, an understanding of all of how ethnic and cultural diversity of the commercial and cultural factors impacts their business. affecting UK businesses are essential. As set out in the Code, one of the As with all directors on UK Boards, key roles for the Board includes directors of colour are likely to have establishing the culture, values a different perspective on the issues, and ethics of the company. It is challenges and opportunities faced important that the Board sets the by their company. In addition, their correct “tone from the top”, and the professional experiences (even if directors should lead by example. similarly qualified) will likely differ from their non-minority ethnic counterparts. In the Corporate Culture Review, Those perspectives and experiences Sir Win Bischoff (Chairman, are inherently valuable as companies FRC) articulated it extremely deal with markets and stakeholders well when he stated: (including investors, consumers and employees) that are becoming more varied and diverse, not less. As the numbers indicated, to date, that Establishing a company’s overall purpose is crucial experience and perspective has been in supporting the values and driving the correct largely absent from UK Boardrooms. behaviours. The strategy to achieve a company’s It follows that the potential for purpose should reflect the values and culture of disconnect between the strategic ambitions of a company and the the company and should not be developed in Board’s ability to draw upon the range isolation. Boards should oversee both.” of skills, perspectives and experiences necessary to provide adequate oversight and to manage properly It follows that, where a company has can create greater risk for a company, made commitments to enhance the the Board and all stakeholders. role that diversity plays in achieving its overall corporate objectives 5.3.2 Underpinning of Corporate and strategy, it must consider Culture & Values diversity in all relevant forms, including gender and ethnicity. Many companies across the UK, notably those in the FTSE 100 and In particular, we believe that a Board FTSE 250, have been clear in their should manifest that commitment commitment to enhancing diversity in the way that it is composed, within their organisations and their the decisions it makes and how supply chains, amongst other things. it considers talent development. It is evident that the Davies Review Fundamentally, we believe that a had a very positive impact in that Board should reflect the breadth regard, and the composition of of a company’s ambitions and Boards and executive ranks in the UK stakeholders, including its employees, has begun to change as a result. customers and communities.

10 See footnote 5.

34 A Report into the Ethnic Diversity of UK Boards 35 5.3.3 Enhanced Brand Value & Reputation 5.3.4 Improved Access to Top Talent or outside of it, the workforce of relates to the materials being supplied, tomorrow will be more diverse than the services being performed, the It has become evident that consumers, It is clear to us that the ability to it has been historically. Organisations jurisdictions that are the source employees and increasingly investors identify, develop, retain and promote that do not appropriately deal with of the supply or the people that are seeking to align themselves with talent within an organisation must this change will likely face a significant comprise part or all of that chain. companies that reflect their own be done with the primary purpose threat to their long-term success. beliefs, values and priorities. It is of enabling the company to address Directors must therefore have the also clear that leading UK companies this increasingly complex and As we have said earlier, in order requisite skills necessary to understand and their Boards have come under interconnected landscape. Therefore, to ensure the continued strength and manage these complexities. increased scrutiny for legal, regulatory having a talent base that has a diverse and attractiveness of the UK and its People drawn from minority ethnic and/or behavioural shortcomings. range of perspectives, experiences businesses, Boards must be willing to communities may have a great deal The combination of the perceived and expertise is essential to ensuring reflect the commercial and societal to offer from this perspective as deficits, as well as the increasingly the long-term viability and commercial realities in which their companies they are very capable of bringing high standards being applied by success of any organisation. operate, not only now, but also in a different cultural experience and regulators, consumers and these the future. Our engagement with perspective to bear, which we believe other stakeholders, means that Boards It is broadly recognised that different business leaders and executive can lead to better deliberation and must consider corporate purpose at backgrounds and perspectives lead search firms has shown us that decision-making at Board-level. least as closely as corporate profit. to a variety of ideas, knowledge and there are hundreds of Board-ready ways of doing things. The converse and capable people of colour who If one were to consider the importance can often be true as well – where there are able to bring their experience of diversity to brand value, one of are too many people from the same to bear and assist corporate the most valuable brands in the or similar backgrounds, they may take Britain to make that transition. world, Apple Inc., recognises at action based on a narrow set of shared the core of its diversity strategy that values, assumptions and experiences. 5.3.5 Better Understanding of “the most innovative companies Organisations that build a reputation Corporate Supply Chain must also be the most diverse.” for valuing differences in today’s global marketplace are more likely to Without question, supply chains for During 2015, the consulting firm attract talented employees who will many of the UK’s leading companies McKinsey published a report that be confident that their value will be have become more challenging – contained research indicating recognised and will be encouraged driven by the increasingly global that companies with more diverse to use the skills, backgrounds, nature of resourcing and also by workforces perform better perceptions and experience they have. the number of items that are being financially, being more likely to required. For the vast majority of have financial returns above their We must all recognise, business companies in the UK, it is rare for national industry medians.11 included, that the UK and its workforce the UK to be the single source of have changed dramatically over the supply of goods and services. While the direct link between past 40 years, and will continue to do Furthermore, efficiencies can drive increased diversity and enhanced so in the future. In fact, it is estimated manufacturing and production value may be the subject of debate, that the UK will be the most diverse to different jurisdictions around what is clear is that when diversity (in country in Western Europe by 2051, the world, any of which will need any form) is managed well, decision- with the proportion of people of to source supplies from a mixture making improves and, therefore, colour in the UK reaching over 30%.12 of places – whether local to that the opportunity for success in the location or from further afield. competitive marketplace becomes The implication for UK companies is greater. In addition, the reputational profound, particularly when combined In such an environment, it is evident benefits for being an organisation with the fact that many of them that UK companies need a Board that embraces the values of inclusion will have significant operations in that is capable of appreciating and and diversity can reverberate developing markets and economies. managing risks associated with through many aspects of business, In order for a company, its Board and global resourcing. Invariably that including employee recruitment its executives to properly manage a means that Board directors require and retention, investor appetite and global business, access to people an understanding of relevant cultural broad stakeholder engagement. with the relevant range of talents and sensitivities, norms and vulnerabilities. Each of these ultimately inures to experience is required. The underlying This is particularly the case where a the benefit of the Company and trends make it very clear that, whether supply chain is understood to carry reflects positively on the Board. resources are drawn from the UK inherent risk with it, whether that

11 “Why Diversity Matters”, McKinsey (January 2015) [http://www.mckinsey.com/business-functions/organisation/our-insights/why-diversity-matters]. 12 See footnote 2.

36 A Report into the Ethnic Diversity of UK Boards 37 6.1 Are the Candidates There? 6.1.6 It has also become clear to the Steering Committee that executive 6.1.1 One of the common refrains that search firms and other recruitment we have heard when discussing professionals can and should be doing the prospect of increasing the more to engage with the community of representation of people of colour potential candidates – at all stages of in senior leadership positions, the pipeline, including potential senior including on the Board, is that executive and Board candidates. The “there are not enough capable Steering Committee encourages the and qualified candidates.” executive search and recruitment community to be more proactive 6.1.2 We do not believe that such in their engagement with potential a conclusion is accurate. candidates and work harder to tap into existing formal and informal networks. 6.1.3 However, we do acknowledge that, as is the case with gender, people of 6.1.7 Notwithstanding the foregoing, the colour within the UK have historically Steering Committee is pleased to not had the same opportunities note that there a number of executive as many mainstream candidates search firms and other recruitment to develop the skills, networks professionals who have begun to build and senior leadership experience and maintain databases of high-quality desired in a FTSE Boardroom. candidates from a minority ethnic background. The Steering Committee 6.1.4 That being said, we believe that any encourages these efforts. These 6 such assumptions are outdated and known and identified professionals of do not reflect a full appreciation of colour represent a broad spectrum the breadth and depth of expertise of experience, expertise and skills available in candidates from a – all of which can benefit FTSE 100 Increasing the minority ethnic background, not and FTSE 250 companies now. Even only amongst UK citizens, but though these reports highlighted also from non-UK nationals. talent in the UK and the US, there is undoubtedly a wealth of qualified or 6.1.5 Since 2016, there have been several high-potential talent in other markets. Ethnic Diversity of reports published (one by Green Park and the other by Audeliss in 6.1.8 Of course, the observations made conjunction with The Financial Times) in the context of the Davies Review that highlighted hundreds of high- still ring true in the context of calibre, “Board-ready” candidates ethnic diversity. Namely, in order UK Boards – who were from minority ethnic to achieve the recommendations backgrounds. The findings of these there are two different populations reports have also been reinforced by a that need to be considered: number of executive search firms that focus on senior-level appointments. • executives from within the Finding the Talent In addition, there are professional corporate sector; and organisations, such as the Executive Leadership Council (in the UK and • people of colour from outside US) and Powerful Media through its the corporate mainstream, annual publication of “The Power List” including entrepreneurs, senior in the UK, with significant access to individuals with professional people of colour who are experienced service backgrounds, senior executives and senior members academics and civil servants. of professional service firms.

38 A Report into the Ethnic Diversity of UK Boards 39 6.1.9 A key challenge in this context is 6.1.12 We do not suggest such changes the lack of ethnic diversity in the will always be easily or comfortably managerial and senior executive made, but we do suggest that they pipeline in many UK companies, are necessary in order to remain at the including the FTSE 100 and 250. leading edge of global competition. For example, as of end of July 2017, there were only six Chief Executives 6.2 Developing the Pipeline of colour in the FTSE 100. Our discussions and experience tell 6.2.1 Although not the focus of this Review, us that other executive positions we cannot emphasise enough how in the “C-Suite” and below important it is for Boards of all UK are similarly challenged. companies to focus on employee development and their executive 6.1.10 Furthermore, we believe that the pipeline with an enhanced focus on observations in the Davies Review ensuring appropriate representation set out below reflect the type of from minority ethnic candidates, as thinking that Boards also need to well as other relevant diverse cohorts. do in the context of identifying candidates that are people of colour: 6.2.2 The importance of focusing on inclusion and diversity in the pipeline was recently underscored by the FRC.13 We agree with the FRC’s The call for the professionalisation of Boards observations that embedding diversity (including ethnicity and gender) in meant that the skills criteria for candidates a corporate succession plan should increasingly focused on the need to have be “part of a holistic approach” taken by UK companies. In other substantial business and Board level words, inclusion and diversity needs experience. Our findings show that over time to be part of the overall corporate strategy, and therefore Boards should this has also evolved into a need for candidates exhibit leadership on, and reflect a to have had significant prior financial commitment to, inclusion and diversity to the same extent that it does all responsibility. We would argue that, although other aspects of corporate strategy. there is a real need for candidates to be 6.2.3 In addition to the Board considerations financially literate, financial responsibility, just set out by the FRC, we believe that like sector expertise, can be taught and should Boards should also consider (i) how they respond to the changing not be a pre­requisite for appointments. Greater demographics affecting the UK, emphasis should be placed on a broader mix of namely the increasing diversity of skills and experience.” the workforce and (ii) how they will ensure that they have executives and other employees that have 6.1.11 Undoubtedly, directors of UK the skills to manage diversity well. companies, namely the FTSE 100 and Therefore, we think that it is of 250 in this context, are being asked to fundamental importance that UK perceive the world through a broader Boards ask themselves at least those lens than they may have historically. two questions when considering For many companies, that will mean their workforce, their employee changing the mould from which a pipeline and the pipeline of potential current Board was formed in order to candidates for Board positions. make a stronger model in the future.

13 See, “Feedback Statement: UK Board Succession Planning Discussion Paper”, FRC (May 2016), pages 11-12.

40 A Report into the Ethnic Diversity of UK Boards 41 6.2.4 In addition, we are firm believers • 8 in 10 believed that factors 6.3 The Role of Executive Search Firms 6.4 Considerations under Data Privacy that companies should encourage other than merit have and Data Protection Law and support their internal high hindered their career; 6.3.1 Executive search firms play an potential minority ethnic employees important role in identifying qualified 6.4.1 Information about a person’s to take on Board roles internally (e.g., • 7 in 10 said that their background and capable candidates for senior ethnicity is considered to be subsidiaries), where appropriate, has been a significant barrier positions within FTSE 100 and 250 “sensitive personal data” under as well as Board and trustee roles to their progression; companies. While we understand the Data Protection Act 1988 (the with external organisations (e.g., that many companies focus on “DPA”) and therefore is subject to educational trusts, charities and • over 60% believed that direct recruitment of senior talent relevant legislative restrictions and other not-for-profit roles). These unconscious bias of CEOs and and Board candidates, it is very limitations related to its collection, opportunities will give experience leadership teams is one of the common for executive search firms storage, use and transmission. and develop oversight, leadership leading reasons for the lack to be retained for that purpose. and stewardship skills. of progress at Board level; 6.4.2 Representatives of the Steering 6.3.2 The adoption of the “Standard Committee have been engaging 6.2.5 We recognise that organisational • 1 in 4 believed that bias and Voluntary Code of Conduct” for constructively with representatives change must begin at the top. discrimination exist within their executive search firms in response of the Information Commissioner’s Stewardship, mentoring and organisational culture; and to the recommendations made in Office (the “ICO”) to discuss the sponsorship are essential components the Davies Report has been well issues which arise in the context of in professional development and • 2 in 3 believed that minority ethnic received and documented. such information being held by third progression. Without the appropriate executives are not in the talent parties, such as executive search firms. commitments from existing Chairs, pools or networks of the current 6.3.3 Following publication of the Boards and executives, UK companies directors or executive search firms. Consultation Version of the Report, 6.4.3 We have had several constructive will not secure the best talent, members of the Steering Committee engagements with representatives of whatever their background and The observations and beliefs had a number of constructive the ICO about the issues presented wherever they may be located. underlying these statements engagements with representatives by the current legal and regulatory suggest that UK companies and of executive search firms. As a result framework applied under the DPA. 6.2.6 In the context of considering their leadership need to enhance of these engagements, there have pipeline issues, it is important for the focus on all aspects of ensuring been amendments to the Standard 6.4.4 In this regard, our efforts to find a Boards to recognise that there is that people of colour have the Voluntary Code of Conduct to clear pathway forward to resolve have significant concern from people same support network, and reflect the Recommendations made. been hampered by the impacts of of colour that they are negatively developmental and advancement The Steering Committee supports Britain’s expected exit from the EU impacted by bias in the work place. opportunities as all other employees. these changes and looks forward and plans associated with the “Great For example, according to a recent to hearing how these changes will Repeal Bill”. Since the legislative review of minority ethnic senior 6.2.7 As was the case with gender, we be implemented in practice and impact of the “Great Repeal Bill” is executive and Board leaders in the strongly encourage UK companies the impact that they have had. uncertain at the time of publication, UK conducted by the executive to establish objectives for the the ICO has been unable to provide search firm Harvey Nash:14 development of their respective 6.3.4 Of course, not all of the principles us with formal or informal interpretive pipelines, inclusive of people of and code will translate directly to the guidance on the matter. As a result, colour, and to record and track issues related to the recruitment of the Steering Committee will work with progress against those objectives, directors of colour; however, many of BEIS and the Government to introduce and report these matters to their the principles and practices can apply amendments to the relevant provisions Boards on a regular basis. more broadly and have a real impact in of law to be adopted by the UK as a the overall landscape in due course. result of the exit from the EU so that the government’s efforts to enhance 6.3.5 Most importantly, following the key ethnic diversity throughout British principles will enable a discussion corporate enterprise are not hindered and dialogue between the client in the same manner going forward. and the search firm, as well as one internally within each organisation. We believe that this is fundamentally important to getting capable and qualified candidates of colour “on the radar” for potential appointment.

14 “The Ethnicity Gap”, Harvey Nash (July 2016).

42 A Report into the Ethnic Diversity of UK Boards 43 Two ideas in particular were canvassed During the course of by more than one voice:

this Review, we were • Statutory Quotas for Boards – for example, persuaded that every a requirement that no Board of a public company should be mono-ethnic, a de part of the business facto requirement in some jurisdictions elsewhere, such as South Africa. world, if not already • Mandated “Short-lists” – for example, a committed to action requirement that Nominations Committees should be required to consider shortlists to increase diversity in that include at least one person of colour – a variant of the “Rooney Rule”, which is leadership, can see the widely thought to have had some success in both the commercial and diversifying the executive ranks of the National Football League in the United States. reputational advantages Whilst the attractions of these approaches may to making progress. be compelling to some, on balance, we could see 7 no advantage to such an approach at this time. The business representatives amongst us were Against this background, we considered clear that such compulsion would be strongly whether further mandated regulatory resisted by most of their members, and that change was appropriate, beyond that valuable energy would be wasted debating which is incremental upon existing unrealistic proposals, rather than focusing obligations and focused on equivalence of on more promising recommendations. information or enhanced transparency.

Of course, however, should the progress which we In the course of our discussions with relevant Approach to seek to make through our recommendations be stakeholders, a minority of those we spoke limited, we will likely need to revisit that decision. to made a case for stronger legislative or regulatory prompts to compel businesses

Recommendations to increase ethnic diversity in leadership.

44 A Report into the Ethnic Diversity of UK Boards 45 Taking half of this population gives 7%- As a general matter, the Boardrooms 10%, which is then applied as a target to, 8 say, a 10-person Board. This translates to 1 of Britain’s leading public companies ethnically diverse candidate for that Board. do not reflect the ethnic diversity of The recommendations we are making are not either the UK or the stakeholders that solely based on the equitable principles of inclusion and diversity, they are ones that are they seek to engage and represent. underpinned by strong industrial logic and the need for UK companies to be competitive in the Parker Review Minority ethnic representation across increasingly challenging global marketplace. the FTSE 100 is disproportionately We firmly believe that successful companies will need to attract, retain and promote the low, particularly when looking for best talent available, irrespective of nationality, UK citizen directors of colour. gender, religion, ethnic background or any other Recommendations perceived difference from the “mainstream”. It is clear that in order to achieve this success, companies must reflect the values of their We believe that in order for corporate Britain stakeholders (including employees, shareholders to reflect the progress that is being made in and the communities in which they sit) and diversity, equality and inclusion generally, also project those values externally (including changes are needed in the Boardrooms to the consumers they are seeking to attract where leadership, stewardship and corporate and the markets in which they operate). ethics are of utmost importance. We believe that now is the time to begin making Our recommendation of “Beyond One by ‘21” changes that will evolve the face of corporate is linked to the UK ethnic minority population, Britain and better prepare UK companies to whereby the target is scaled to around half of this continue to be global leaders in business over the given population segment. The current UK ethnic longer term, benefitting from greater diversity of population is 14%, set to rise to 20% by 2030. experience, expertise and thought as a result.

46 A Report into the Ethnic Diversity of UK Boards 47 In light of the foregoing, our recommendations are as follows:

1. Increase the Ethnic 2. Develop Candidates for the 3. Enhance Transparency & Diversity of UK Boards Pipeline & Plan for Succession Disclosure

1.1. Each FTSE 100 Board should have at We recognise that qualified and credible 2.1. Members of the FTSE 100 and FTSE 250 3.1. A description of the Board’s policy least one director of colour by 2021; and candidates can come from a variety of should develop mechanisms to identify, on diversity should be set out in a each FTSE 250 Board should have at backgrounds, genders and nationalities. develop and promote people of colour company’s annual report, and this least one director of colour by 2024. This Review does not seek to mandate where within their organisations in order to ensure should include a description of the candidates are drawn from, as this will need over time that there is a pipeline of Board company’s efforts to increase, amongst 1.2. Nomination committees of all FTSE to be considered carefully by each company capable candidates and their managerial other things, ethnic diversity within its 100 and FTSE 250 companies should given its strategic needs and ambitions. and executive ranks appropriately reflect the organisation, including at Board level. require their internal human resources importance of diversity to their organisation. teams or search firms (as applicable) to However, we believe it is important to highlight 3.2. Companies that do not meet Board identify and present qualified people that only about 2% of all FTSE 100 Board directors 2.2. Led by Board Chairs, existing Board directors composition recommendations by of colour to be considered for Board are UK citizen people of colour. This compares of the FTSE 100 and FTSE 250 should the relevant date should disclose in appointment when vacancies occur. with people of colour comprising approximately mentor and/or sponsor people of colour their annual report why they have not 14% of the overall population in the UK. within their own companies to ensure their been able to achieve compliance. 1.3. Given the impact of the “Standard Voluntary readiness to assume senior managerial Code of Conduct” for executive search firms Looking at all people of colour on the Boards of or executive positions internally, or non- We believe that the support of Government in the context of gender-based recruitment, FTSE 100 companies (regardless of nationality), executive Board positions externally. and regulatory bodies is essential to achieving we recommend that the relevant principles at the end of the first half of 2017, there were only progress in all aspects of diversity and social of that code be extended on a similar basis 85 individual directors who are people of colour 2.3. Companies should encourage and support mobility, including increasing the representation to apply to the recruitment of minority (comprising approximately 8% of the total available candidates drawn from diverse backgrounds, of people of colour in decision-making and ethnic candidates as Board directors of positions) – over 40% of which are drawn from including people of colour, to take on leadership roles in corporate Britain. FTSE 100 and FTSE 250 companies. seven individual companies, five of which have Board roles internally (e.g., subsidiaries) been historically headquartered outside of the UK. where appropriate, as well as Board and In order to help UK companies enhance the ethnic Fifty-one companies within the FTSE 100 had no trustee roles with external organisations diversity of their Boards, we have developed the directors of colour, and from a seniority perspective, (e.g., educational trusts, charities and other “Questions for Directors” set out in Appendix A only six individuals who held the position of Chair not-for-profit roles). These opportunities and “The Directors’ Resource Toolkit” set out in or Chief Executive Officer are people of colour. will give experience and develop oversight, Appendix B to help existing Boards deliver on the leadership and stewardship skills. recommendations of this Report. We note, with appreciation, the changes made to the Standard Voluntary Code of We recognise that organisational change Conduct in response to our recommendations must begin at the top. Stewardship, mentoring in the Consultation Version. We look forward and sponsorship are essential components in to seeing these being implemented. professional development and progression.

We also believe that such companies should Without the appropriate commitments from carefully consider and apply the remainder existing Chairs, Boards and executives, UK of the recommendations, including asking companies will not attract, develop and retain themselves “Questions for Directors” set the best talent, whatever their background out in Appendix A to this Report. and wherever they may be located.

We encourage companies to establish objectives for the development of their respective pipelines and to record and track progress against those objectives, and report these matters to their Boards on a regular basis.

48 A Report into the Ethnic Diversity of UK Boards 49 Appendix A: Questions for Directors

This appendix has been developed to assist Boards, including their Chairs, to consider eight key questions in the context of addressing ethnic diversity at the Board. We have drafted these questions to be consistent with the key considerations that directors need to make in the satisfaction of their statutory duties under the UK Companies Act and in a manner that is consistent with the UK Corporate Governance Code.

Main Principles of the UK Code Chair All Directors

Leadership • Does our board succession plan • Have we recently considered, and • Every company should be headed (both executives and non-executives) discussed with the executive directors, by an effective board which is include criteria that would bring how the ability to deliver our strategy collectively responsible for the long- forward qualified candidates from would be strengthened by having term success of the company. ethnically diverse backgrounds? greater diversity of background, experience and insight at the board?

Effectiveness • Can we evidence that our board has • Can we evidence the fact that • The board and its committees should enough constructive and diverse thought we have asked our HR team or Appendices have the appropriate balance of being expressed to avoid “group-think” recruitment consultants to identify skills, experience, independence and and to provide insight into the trends and present to us candidates knowledge of the company to enable that will impact our markets, customers, that represent ethnically diverse them to discharge their respective employees and other key stakeholders? backgrounds to join our board? duties and responsibilities effectively.

Accountability • Would the outside world (specifically • Do we have an internal process to • The board should present a fair, balanced customers, suppliers, partners, regulators identify, develop and promote high- and understandable assessment of the and legislators) currently see our board potential minority ethnic employees company’s position and prospects. as appropriately reflective of our stated in order to develop “board-ready” values, our commitment to the markets and candidates for internal subsidiary • The board is responsible for communities in which we operate and the and external appointments, determining the nature and extent of people we employ in our organisation? and can we evidence that? the principal risks it is willing to take in achieving its strategic objectives.

Remuneration • N/A • Have we confirmed that our • Remuneration should be designed remuneration policies do not to promote the long-term impact negatively on any diverse success of the company. cohorts and are consistent with our aims for inclusion and diversity. • Performance-related elements should be transparent, stretching and rigorously applied.

Relations with Shareholders • Have I recently asked our shareholders • N/A • There should be a dialogue with about the role they see diversity shareholders based on the mutual (including ethnicity) playing in our board understanding of objectives. composition, the overall company and the delivery of our strategic objectives? • The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.

Although these questions have been cast in the context of ethnic diversity, we encourage all companies to use the principles underlying these questions to inform and guide their discussions regarding all aspects of diversity.

50 A Report into the Ethnic Diversity of UK Boards 51 Appendix B: The Directors’ Resource Toolkit

Red Flags Introduction

When considering the implementation of the • The human resources teams or executive This Directors’ Resource Toolkit (the Toolkit) has recommendations and the use of the “Questions recruitment firms indicate that there been developed to provide key information to 1 for Directors”, Board directors should be cognisant are not any qualified minority ethnic Chairs and other Board directors responsible for Investigation of “red flags” that may exist or may develop in candidates available to fill a vacancy. implementing the Report’s recommendations to their organisation. For example, Boards should be achieve the vision of getting to Beyond One by ’21. cognisant of the following potential “red flags”: • The profile of executive officers or members of senior management is not ethnically diverse. We acknowledge that some listed companies • The Board does not currently have already have good Board representation by 4 2 any directors of colour. • Members of the executive management directors of colour. Whilst the primary aim of Review and Consensus and team do not sponsor or mentor any people this Toolkit is to provide resources and ideas measurement commitment to change • The Board and senior management lack the of colour within the organisation. to help Boards which do not have such good resources and mechanisms to collect sufficient representation, it may also serve as a useful guide data to analyse the diversity profile of their • The pipeline of “high potential” to those Boards which seek to enhance further organisation and the business case for change. candidates is predominately of one ethnic diversity. This includes those companies race, gender, nationality or religion. who wish to improve representation by people • Board self-evaluations may not include an of colour in the Board pipeline, however it is not 3 assessment of its effectiveness with respect to • There is a “clustering” of particular ethnicities designed specifically with that aim in mind. Response inclusion and diversity, including an analysis within specific jobs or seniorities. of whether the Board has considered the strategic importance to the organisation • Internal engagement surveys indicate that A road map for change actual or perceived bias is affecting career • Members of senior management do progression for non-majority ethnic employees. not carry out regular assessments to In the Toolkit, we address potential ‘red flags’ 1. Investigation – examining the current analyse the data collected and to monitor (see opposite) that may exist or develop in the ethnic diversity profile of the Board • There is a high level of “opting-out” or non- progress on the Diversity agenda. organisation. Such red flags may act as a barrier reporting of personal information regarding to the achievement of greater ethnic diversity. 2. Consensus and commitment to • An ethnically diverse range of board candidates an individual’s ethnicity within the organisation change – accepting the diagnosis and has not been previously considered. (as this suggests a degree of concern In addressing these red flags, we suggest agreeing the need for change regarding an employee’s own ethnicity). that Boards focus on a four-stage lifecycle • Vague terms like “fit” or not being the right to advance boardroom diversity and meet 3. Response – addressing the current state with “type” are used to describe why a potential Of course, we do not suggest that the existence the challenge of Beyond One by ‘21. a response that is relevant and proportionate candidate may not be appropriate, without of any of these conditions to mean definitively sufficient objective and detailed supporting that there is a problem to be rectified within 4. Review and measurement – assessing the evidence being given and tested. the relevant organisation. However, we do success of interventions and achievements suggest that the presence of any or all of • The Board consists solely of people these “red flags” should indicate that further The Toolkit material is not meant to be complete with similar professional backgrounds/ investigation by the Board is warranted. or exhaustive, and we expect that resources, qualifications, particularly if the relevant practices and issues will evolve over time. We business has global reach. do hope, however, it will support and challenge Boards in their ethnic diversity journey. • Diversity programmes have been implemented in the past but not delivered results

52 A Report into the Ethnic Diversity of UK Boards 53 Lifecycle stage: Lifecycle stage: 1. Investigation 2. Consensus and commitment to change

Red flags Recommended actions Resources Red flags Recommended actions Resources

• The Board does not currently • Board discussion to • Professional assessment • The Board consists solely of • Board-led assessment to articulate a • Reports on business benefits of have any directors of colour understand the following: programmes to assist the Board in: people with similar professional case for change on how boardroom greater diversity, for example, “Talent backgrounds and qualifications ethnicity could assist in better not tokenism” by EHRC, TUC and CBI. • The profile of executive officers or • What would an ‘ethnically • Root cause analysis understanding of key markets: members of senior management diverse’ Board look like for us? • The Board and senior management • Professional assessment is not ethnically diverse • Evaluating existing and lack the resources and mechanisms to 1. Is there an impetus for programmes to assist the Board in: • Why are there no directors industry good practice collect sufficient data to analyse the change on the Board? • An ethnically diverse range of colour on the Board? • Defining the company’s diversity profile of their organisation 2. Does the Board have a clear of Board candidates has not • Evaluating the research global I&D goals and the business case for change business case for increasing been previously considered • Is it a result of a lack of Board evidence of barriers to, and diversity? If it doesn’t, why is this focus, or unavailability of talented solutions for, increasing • There is a high level of “opting- • Using diagnostic tools to the case, given shifting UK and • Vague terms like ‘fit’ or not being candidates, or something else? ethnic diversity on boards out” or non-reporting of personal identify the drivers of differing global demographic patterns? the right ‘type’ are used to describe information regarding an career outcomes for specific • Is there evidence of • Identifying barriers to why a potential candidate may not individual’s ethnicity within the 3. Does the outside world see groups of employees bias on the Board? success of people of colour be appropriate, without sufficient organisation (which may suggest your Board as a reflection of in the talent pipeline. • Creating a I&D strategy which objective and detailed supporting a degree of concern regarding your business’ values and in the • Nomination Committees to balances global consistency evidence being given and tested. an employee’s own ethnicity) context of realising your strategy? provide accurate descriptive with varied local context to briefings to Executive Search Firms • There is a “clustering” of • Board to task senior management enable organisations to get detailing the qualities required of particular ethnicities within to introduce a mechanism that the best out of all their talent the potential candidates, to ensure specific jobs or seniorities. collects and analyses robust, that suitable people of colour are reliable and accurate diversity data • Articulating a comprehensive included on long-lists for NED of the organisation’s employees, data strategy, including how it vacancies. Consideration should relevant and proportionate to the would classify, collect, monitor, be made whether Executive Search organisation’s sector and business. share and act on ethnicity data Firms are linked with an ethnically Such data would inform future • Improving understanding of diverse pool of candidates and workforce projections and rationales different networks (e.g. Power List). ethnically diverse customer bases where under-representation by and how to improve access to the • The Nomination Committee people of colour is apparent. different customer spectrum. itself should also be as diverse • Board to instruct senior management as possible. This will help to to develop an employee engagement reduce the likelihood of members survey which measures Diversity hiring people of their mould. practices and is inclusive with a clear mechanism in place to address • Board consideration of the current areas of concern identified through senior talent pipeline, specifically: the survey. The results of the survey • Does this support an aim of could also be fed into the annual or greater representation on the quarterly review process agenda Board by people of colour? for discussions at Board level. • Boards might want to understand who is being recruited by the Company; who is leaving; who is being promoted; who is not; and why? • Boards to spread Inclusion and Diversity (‘I&D’) ownership to senior management with clear I&D targets assigned to each as an enabler for accountability and to obtain an understanding of any potential clustering in the relevant groups.

54 A Report into the Ethnic Diversity of UK Boards 55 Lifecycle stage: Lifecycle stage: 3. Response 4. Review and measurement

Red flags Recommended actions Resources Red flags Recommended actions Resources

• Diversity programmes have • Board to request that senior • Diversity experts specialising • Board self-evaluations may not • Questionnaires and individual • External consultants specialising been implemented in the past management introduces a in change facilitation to include an assessment of its interviews between the Chair of in diversity matters to facilitate but not delivered results cultural and behavioural change design a strategy to promote effectiveness with respect to the Board and each director to the evaluation process programme to equip all teams inclusion, including: inclusion and diversity, including incorporate the following questions • The pipeline of “high potential” with skills and awareness to be an analysis of whether the Board to which the respondent can • Assistance with putting in place a candidates is predominately of one inclusive leaders and to achieve • Design of suitable targets and has considered the strategic state: ‘Strongly agree’, ‘Agree’, milestone plan designed to increase race, gender, nationality or religion a more diverse senior leadership. identify key performance indicators importance to the organisation ‘Disagree’ or ‘Strongly disagree’: 15 the pace of implementation. This may include integrated • Internal engagement surveys • Design of a I&D dashboard and learning programmes aligned to • Members of senior management 1. The Board holds senior indicate that actual or perceived a regular audit cycle to drive the organisation’s priorities, to do not carry out regular management properly to bias is affecting career progression accountability and visibility of promote a culture of inclusion that assessments to analyse the data account on its progress for non-majority ethnic employees progress across the organisation enables all people to succeed. collected and to monitor progress on inclusion and diversity, on the Diversity agenda. including the advancement • Members of the Board or the • Design of behavioural change • Board to instruct senior management of people of colour senior management team do not interventions to ensure that to implement a process to ensure sponsor or mentor any people of change is sustained. the risk of bias is considered 2. Ethnic diversity is well covered colour within the organisation in employee assessments and in our talent and succession planning discussions • The human resources teams performance reviews. This would at Board meetings or executive recruitment firms include practical interventions to ensure practices within recruitment, indicate that there are not any 3. I feel it is safe to air different selection, progression, reward qualified minority ethnic candidates views to others so that and recognition have minimal available to fill a vacancy. the points I raise will be unconscious or conscious bias. respectfully debated by all • Board and senior management to 4. I feel that the Board is introduce reverse mentoring whereby diverse in its composition executive management is paired and thought processes with employees of minority ethnic backgrounds. This can be further 5. Members of the Board make sure enhanced by introducing targeted attendees coming to present at sponsorship programmes aiming board meetings feel included to ensure a diverse range of talent and welcome as they arrive at progresses through to Leadership. meetings and leave them and throughout their attendance

6. As a Board we challenge each other constructively to make sure we look at issues from different angles

• Board to instruct senior management to clearly evidence the success criteria for each diversity intervention in order to evaluate success. Management should also have plans in place to build upon previous successes and to rationalise how new aspirations would be measured.

• Internal and external communication of progress should be reported, to further engage with stakeholders.

15 We suggest only four categories to exclude ‘neither agree nor disagree’ which may encourage Board members to ‘sit on the fence’.

56 A Report into the Ethnic Diversity of UK Boards 57 Case Study: EY

Appendix C: Cultivating Racially Diverse How we have Moved the Leadership Dial on Diversity: Case Studies The global workforce is becoming more Diagnosis and the Catalyst for Change diverse as a result of increasing international The Steering Committee believes it important to mobility and demographic and social shifts. In 2011, 96% of EY UK Partners were white. highlight developing best practices relating to We serve global clients and we help our clients Despite the roll-out of programmes targeting efforts being made to increase ethnic diversity succeed by creating and building the highest the development of ethnic minority leaders, in the Boardroom and other senior leadership performing teams through the right working the dial was not moving on racial diversity and positions within the corporate environment. environment and inclusive leadership. we realised we needed to shift our strategy if EY was to become more representative We thank those organisations that have agreed Developing inclusive leaders who can connect of our people and our client base. to provide us with practical examples of the and engage with anyone – regardless of their steps they have taken to improve diversity in background, style or culture – is a crucial part of Steve Varley, EY UK Chairman, initiated an their organisations and within their executive EY’s approach to our people and our clients. examination of the culture and processes in the and board ranks. We hope that these examples firm which were persisting in generating the same provide guidance and insight to companies who We have built the skills of all our people to team disproportionate outcomes to under-represented are committed to increasing the ethnic diversity and lead inclusively, implementing an extensive groups. We made D&I a business issue and within their organisations and Boardrooms. Inclusive Leadership Programme. This programme engineered transparent changes to accountability: has now been delivered to over 2,800 of our people, including the majority of our partners. • D&I ownership was moved to the four service lines with clear leadership and direction from We are proud that EY member firms are regularly Steve Varley, through a new governance cited by external organisations as being leaders structure with monthly accountability meetings. in Diversity and Inclusiveness (“D&I”) and for providing an excellent working environment. • D&I targets were added to Partner scorecards – an enabler for accountability. We also invested in building a pipeline of diverse internal talent.

• Public targets were announced. These stated that 10% of New Partner admissions should be from an ethnic minority; the target was set on a rolling three year basis.

• We improved management information which enabled the four service lines to diagnose which of the following metrics (shown in the graphic overleaf) needed to be addressed most urgently.

58 A Report into the Ethnic Diversity of UK Boards 59 Representation Promoting Inclusive Leadership Pilot study on ethnicity and careers For organisations

• Reasonable proportion We realised in 2011 that the key to achieving Through a pilot study looking at the impact This summary recommends three practical steps of women and ethnic fair and inclusive representation amongst of ethnicity on the journey to becoming a organisations can take to make sure that the career minorities at junior levels our leaders was not just to target the under- partner, we discovered that acquiring ‘Career journey is smoother, regardless of ethnicity: represented groups. We implemented a cultural Capital’ is important for completing the (approximately 50% and behavioural change programme to equip voyage and that a person’s ethnicity makes a and 25% respectively) all our leaders with the skills and awareness difference to how this is accomplished. The they needed to be inclusive leaders. study recommended a number of steps to be 1. Reflect • Representation declined taken to ensure that everyone is supported on to 17% and 4% at partner This, we believe, is the key to creating a more their journey to partner. These steps are being Explore what helps careers go diverse senior leadership having as it does the implemented at EY and are illustrated here. smoothly for those who fit the cultural mantra “to interrupt the status quo”. As our norm and replicate it for all. Identify white (and male) population has historically The three stages of Career Capital Ratings and promotions been more successful in reaching leadership, potential obstacles for those who are they have the power to change its make-up. 1. Know-how different and remove these obstacles. • Performance ratings were • Early career not always distributed in Our strategy is to develop the inclusive leadership • Skills and job-related knowledge a representative way capability of all our people at every level and to 2. Talk build inclusion into all our business processes. 2. Know-who • Promotions not always • Mid-career Educate everyone, especially those In addition to our Inclusive Leadership Programme proportional to gender and • Formal and informal networks with significant leadership roles, we continue to have a number of targeted ethnicity of our population inside and outside work programmes aiming to ensure our diverse talent in the challenges relating to race progresses through to leadership positions. diversity and ensure they practise 3. Know-why Sponsorship is key to career progression and articulating those challenges. Attrition we have implemented “CareerWatch”, which • Later career matches our high-performing female and Black • Career aspiration and drive, personal values, identification • Disproportionate and Minority Ethnic (“BME”) talent at manager level with influential Partner sponsors. Alumni of with organisation culture. 3. Watch attrition relating to our our award-winning BME Leadership Programme Help identify diverse rising ethnic minorities mentor the next generation of BME talent. stars who will benefit from • When recruiting at Our employee networks provide informal developing their career capital. experienced levels development events and networking we tended to recruit support, as well as helping us to recognise mainly white men the intersectionality of our employees across gender, race and ethnicity. For minority individuals aiming for partnership Satisfaction Be aware • Our women were less satisfied than our men in Be aware of the three types of career our people survey, and capital you need to acquire. our ethnic minorities were less satisfied than our white people

60 A Report into the Ethnic Diversity of UK Boards 61 Transparency and Targets The Inclusive Leadership

EY believes that public targets matter. As Programme (ILP) at EY signatories to the UK Government Equalities Office “Think, Act, Report” voluntary framework, is helping individuals learn to identify EY looks beyond gender reporting to include their unconscious biases, how those reporting on BME statistics including the pay gap. biases affect organisational culture and how to interrupt the impact of their Our UK business aims to have at least 30% female and 10% BME representation in our new biases to enable individuals to achieve partner intake, measured over a rolling three-year their potential. The programme is on- financial period. The table below shows how going and is presently in its 3rd phase. we have neared or exceeded our own targets. • The majority of UK&I Partners and a significant number of Managers Actual results to Directors have attended the Inclusive Leadership programme for Phase 1 & Phase 2 Target Rolling 3 years Rolling 3 years to 1 July 2016 to 1 July 2017 • Finalists for 2015 Race for Opportunities Award Female 30% 27% 28% • Winner of Opportunity Now Inclusive Culture Award BME 10% 13% 11% • Winner of 30% Club Everyday Inclusion Award

Impact to date What have the results been so far? • The programme has raised awareness Our UK Leadership team is currently 30% and action beyond traditional female and 10% BME. Within our UK Partner Unconscious Bias training population; our Partner representation • The language from the ILP Programme is now 20% female and 9% BME. is now embedded within the Since we implemented the change programme organisation and used widely described above, BME representation in our • Inclusive Leadership is a priority on Partnership has doubled to 9%. 30% of our scorecards and embedded into processes graduate intake in 2017 were ethnic minority which determine outcomes for our people and recruitment targets are starting to deliver results. Challenges persist and we continue • Summer of Inclusion campaign to focus on equalising outcomes across in 2015 and 2016 reached all our the people metrics as we drive forward our people in UKI and was utilised agenda to promote greater inclusivity in EY. externally via Social Media

62 A Report into the Ethnic Diversity of UK Boards 63 Tactics

Stage 1: The first stage was a major and emails to these employees reminding them broad reaching communication campaign of the 3 messages above, and asking them to to all employees via numerous channels. update their record. This immediately resulted Case Study: (See Supplements 1 and 2 for detail) in a significant uplift of almost 10 % points. Results were sent to all Group and (then) Stage 3: We then also targeted employees Divisional Directors via HR Business Partners who had begun but not completed their on a weekly basis, so that further efforts could records. Individual emails went out to those be made locally where numbers were not who ‘had not completed or had only partially shifting, or conversely, to feed back positive completed’ their record. Again this resulted in Nationwide results where increases were apparent. an encouraging uplift of around 6-7 % points.

Stage 2: When we had achieved a certain Stage 4: We continued to send targeted level and it was clear that we had made good emails on a weekly basis to individuals who had in-roads (at around 50-60%) but had begun not completed. Once we hit 90% we agreed Increasing Diversity Declaration Rates at Nationwide to plateau, we targeted individual employees that a maintenance reminder email should whom we knew from our records had not go out to any stragglers and to capture new Building Society completed their online declaration. We sent starters on a monthly basis. This continues.

In April 2015 Nationwide Building Society’s The PNTS option has been used by diversity declaration rate across all monitored some employees, but not by nearly as protected characteristics was just over 26%. many as we might have expected given Supplement 1: Communications Activity, May – September Numerous previous attempts to encourage the previous low declaration rates. declaration, via online self- service upload to our HR data management system, had Throughout the campaign, our Communication from HR Director sent to all other • Corporate News item not resulted in any significant uplift. three key messages were to: Directors and then through to all employees. • Branch Network news item Managers tasked with driving activity locally to: • HR Intranet article (‘You & Nationwide’) In early May 2015 ethnicity classifications were 1. Tell people why we want the data. • Update Diversity data • HR HelpPoint amended and brought into line with the census categories and a ‘Prefer not to say’ (PNTS) We clearly explained the benefits • Update Emergency contacts • Twitter campaign option was added to our online system. to them as individual employees • Nationwide Live! online (internal Communications included current completion magazine) article HR then launched a Diversity Declaration Rate and to the organisation as an rates and encouraged managers to set aside time for their teams to complete updating Campaign in early May. This ran through to employer. Nationwide AskHR Team (our HR support October 2015. We set ourselves with a stretching activity (this was particularly important in and advice function) activity included: target of 90% declaration rate (across all our branches and contact centres). categories). We also sought to increase emergency 2. Remind people that declarations • All employees who call AskHR asked if contact details reporting at the same time. Bespoke session with Directors’ PAs they had completed their diversity (and are confidential. We explained to ensure all details for our most senior emergency contact details) at the end of the By the end of October 2015, we had increased what we do with the data and executive population had been captured. call and if not, assistance/rationale given diversity declarations rates to 90%. By February on how to do this and why important. how we use and protect it. Message circulated to all our Employee 2016, it had increased slightly to 91%. Ethnicity Network Groups, to drive participation • Line managers asked the same but also if they declaration is almost 96%, with all other monitored through their membership. Our diversity had cascaded the message to their teams. characteristics: sexual orientation, disability, 3. Reassure people that they did Champions in the Branch Network also spread faith/belief just below 93% each. (Age and not have to declare a personal the word and encouraged declarations. Additional channels included: gender data comes via other sources). characteristic if they do not wish Nationwide’s employee Trade Union • Tying messaging in with other communications In December 2016 we hit an all-time high of to, as there was now a ‘prefer not (NGSU) also reflected key messages in such as Pension and Pay and Benefits 97% (averaged across all classifications), with Union communication to members. communications/statements. ethnicity highest above 97% and disability lowest to say’ option. We reiterated that at 93%. Sexual orientation and Faith/belief were • Employee Benefits landing page they must still complete the whole ED&I Team incorporated messaging both 96%. We have since remained relatively amended to include message about into a series of diversity roadshow which steady at around 94%-97% each month. online declaration one way or checking personal details. ran in late summer and into pre-launch another. communications for new ED&I training. • Email auto-signature campaign in HR during month of June with key messages. Internal Communications Team activity to support/reiterate key messages included:

64 A Report into the Ethnic Diversity of UK Boards 65 Supplement 2: Correspondence used in Appendix D: monitoring employee diversity at Nationwide Methodology

Purpose Benefits

We collect employee diversity data in order to • Builds reputation and brand – there is a 1. The FTSE 100 listings were taken as at 31 July This creates a local versus global tension with look for differences between groups, in relation solid body of evidence to show that the best 2017. Board data were collected through 31 implications for terms like “minority” which to different employment outcomes (such as performing organisations are those that July 2017. In some cases, Board composition are relative, localised and contextual. Thus, recruitment or promotions); identify trends over invest most on promoting equality, diversity might have changed in the time since the data included in our list are non-white individuals time; investigate the reasons for any differences and inclusion in their workforce. Those that were collected. We accessed data on each who may self-identify as Latina/o but may not identified and then put suitable actions in place to seek to understands the composition of company from multiple sources, including be categorised in the UK as minority ethnic. help achieve or maintain equality of employment that workforce are seen to value diversity the BoardEx database, annual reports, outcomes between groups. This is about ensuring and corporate and public websites (e.g., 5. We acknowledge that ethnicity is challenging fair and equal access to opportunities - for all. • Boosts recruitment and retention – Bloomberg, Wikipedia, media). We entered to measure and ethnic categorisation monitoring helps us to recruit and retain the data on board size and board composition is a combination of self-identification Monitoring the diversity of our employees best people for the widest talent pools, by (excluding Company Secretaries) into Excel and ascription by others. The ideal enables us to examine how our employment identifying any barriers that may exist at work spreadsheets. This methodology broadly methodology for measuring ethnicity (with policies and processes are working and for people from different backgrounds mirrors that used by Cranfield’s yearly significant practical hurdles) would be to identify any areas where there may be a index, the Female FTSE Board Reports, and to ask individuals directly how they self- disproportionate impact on certain groups of • Improves productivity – we know that valuing is consistent with the approach taken in identify. In the absence of this, we believe employees, that can then be addressed. and supporting the diversity of people’s the Consultation Version of the Report. our methodology is one of the most robust backgrounds and lifestyles is important in processes for assessing ethnicity on boards. Monitoring can lead to the development making the most of the contribution that 2. For inclusion in the index, we checked of better and more informed, inclusive they can bring to Nationwide’s performance directors’ names and accompanying • We used multiple methods to decision making, including decisions on and is likely to result in greater motivation photographs; these data were available validate and cross validate our list. recruitment, promotion and development. and engagement across all groups on the virtually all of the relevant corporate websites. For these data points, we sought • Rather than select in, we adopted a method of selecting out individuals who Monitoring allows us to assess to what extent our • Creating awareness – both internally and out markers that signalled white European were apparently of White European workforce is reflecting the customers we serve and externally, monitoring signals Nationwide’s origin. Where this was not evident, further ancestry based on a combination of their the communities in which we operate. As a national understanding of and commitment to checks were made, such as biographic data names with photos. Where both photo financial services provider and employer we must creating a more inclusive work environment (education, nationality) from the BoardEx and name did not fit with White European strive to reflect the UK’s increasing diversity database and Bloomberg entries. If additional ancestry, additional checks were made. • Providing specific adjustments, training or data were required, these were triangulated with more general media and Wikipedia Finally, monitoring also helps us minimise interventions – we are better able to anticipate • We believe our methodology runs the photos and/or autobiographical text. possible legal, financial and reputational risk. needs and support employees with differing risk of over reporting minority ethnicity requirements (as a result of an impairment rather than under reporting, as some or caring responsibilities for example) 3. Once the initial list was compiled, we engaged in further validation checks by people may not “look” like minorities drawing on the Steering Committee’s or may not self-identify as minorities • Identifying and addressing any inequalities despite being of “non-white ethnic” - in applying our employment practices knowledge and networks regarding directors of colour of whom they were aware. origin (e.g., due to fore parents’ historic migration), but may have been included • Avoiding risk – for example damaging 4. We accept that no single noun or group in our list based on their names. and costly employment tribunals or of nouns would be perfectly suitable and negative publicity. Being able to point to a use the broad term “people of colour” to • One aim of this Report is to highlight the considered approach to collecting and then describe individuals with evident heritage difficulties with accurately monitoring using diversity data to inform employment from African, Asian, Middle Eastern and ethnicity on boards. The reporting decisions/ policy making, helps provide South American regions. Thus, our focus is errors associated with conducting this evidence of good employment practice on non-white directors. Although this Report or any other similar index reinforce the is produced in the UK and is based on the case we advance for organisations to

top 100 companies listed on the London strongly advocate that their employees Stock Exchange, these organisations are, by self-categorise on the basis of ethnicity, nature, major multi-national companies. and for organisations to report these data. In the future, we will continue to finesse our methodology with additional (Amanda Rice. Head of Culture support and resources, drawing on this & Inclusion. Nationwide) flagship report as a starting point.

66 A Report into the Ethnic Diversity of UK Boards 67 Sir John Parker GBE, FREng David Tyler

Sir John was born into a farming family in County David is Chairman of two listed companies: Biographies Down (Northern Ireland). He studied Naval J.Sainsbury plc and Hammerson plc. He also chairs Architecture and Mechanical Engineering at the Domestic and General Group which is privately College of Technology and Queens University, owned. Previously, he has chaired Logica plc Belfast and joined the ship design team at Harland and 3i Quoted Private Equity plc, and has been a & Wolff in 1964 and subsequently had extensive Non-Executive Director at Experian plc, Burberry ship design, research and engineering experience. Group plc and Reckitt Benckiser Group plc.

Sir John is Chairman of Anglo American David’s executive career was spent in financial plc and Pennon Group plc. He is currently and general management in Unilever, a Non-Executive Director of Carnival NatWest, Christie’s and GUS. He has an MA Corporation and the Airbus Group. in Economics from Cambridge University, and is a Fellow of the Chartered Institute of He has chaired five FTSE 100 companies, including Management Accountants and a Member of National Grid PLC, P&O Group PLC, RMC Group the Association of Corporate Treasurers. and Lattice Group. He was Deputy Chairman of DP World (Dubai) and Joint Chairman of Mondi PLC. He chaired the Court of the Bank of England and was a Member of the Prime Minister’s Business Council of Britain, Chancellor of the University of Southampton and immediate Past President of The Royal Academy of Engineering.

68 A Report into the Ethnic Diversity of UK Boards 69 Dr Doyin Atewologun Sanjay Bhandari Neil Carberry Helen Mahy CBE Ken Olisa OBE Trevor Phillips OBE

Doyin, a Chartered Organisational An experienced partner, Sanjay is Neil is the Director of People & Skills at Helen is chair of The Renewables Ken is Founder and Chairman of Trevor is a writer and television producer. Psychologist, is a researcher and a member of EY’s UK & Ireland Tax the CBI and is responsible for setting Infrastructure Group. She is also a non- Restoration Partners, the boutique He is co-founder of Webber Phillips consultant with expertise in organisational Leadership Team responsible for out a framework to make the UK a great executive director of SSE plc, MedicX technology merchant bank and architects Ltd, a data analytics provider. development, diversity & inclusion, innovation; working to develop the place to invest and create jobs. Neil Fund Ltd. and a Norwegian Energy of the Virtual Technology Cluster intersectionality and leadership. Doyin is tax practice of the future. To our leads a team that campaigns on behalf company, Bonheur ASA. She was, model. Ken’s technology career spans Trevor currently serves as the President a Lecturer in Organisational Leadership clients he is a global professional of CBI members on labour market and between 2003 and 2013, Company over 30 years commencing with IBM of the Partnership Council of the & Learning at the School of Business & providing leading analytic technology skills issues, including employment Secretary and General Counsel of from whom he won a scholarship while John Lewis Partnership. He is the first Management, Queen Mary University of solutions, helping them meet their law, employee relations, equality and National Grid plc where she was also at Fitzwilliam College, Cambridge external appointment since 1928. London and Visiting Fellow at Cranfield legal and regulatory requirements. diversity, pay, pensions, education, executive sponsor of inclusion and University. In 1992, after twelve years He is also currently the deputy chair School of Management, UK, the Lagos skills and in-work learning, immigration, diversity, about which she is passionate. as a senior executive at Wang Labs of the Steering Committee of the Business School, Nigeria and University Sanjay is the partner sponsor for EY’s health and safety, and human rights. She is a former supervisory board in the US and Europe, Ken founded National Equality Standard and Chair of Pretoria, South Africa. Doyin is also diversity and inclusiveness strategy for member of Opportunity Now. Interregnum, the technology merchant of Green Park Diversity Analytics. a founding member and Deputy Chair race, and partner champion for many of Neil is a member of the council of ACAS bank. He was elected as a Fellow of the of the British Psychology Society’s EY’s award winning race initiatives. He and of the Low Pay Commission, which Helen has also been a non-executive British Computer Society in 2006. Trevor is the former chair of the Equality Diversity & Inclusion at Work Group. is a visible role model and an influential makes recommendations about the director of Aga Rangemaster Group plc, and Human Rights Commission. force for change within the firm. level of the National Minimum Wage. Stagecoach Group plc and SVG Capital He has considerable public company He had previously been the Chair Doyin obtained her PhD on leader He is a Chartered Fellow of the CIPD. plc as well as being a former chair of Board-level experience on both of the Commission for Racial identity development of Black, Asian Before becoming director, Neil spent the GC 100 Group. She was born and sides of the Atlantic. He is currently Equality and the elected chair of and Minority Ethnic senior managers four years as Head of Employment and brought up in Guernsey and qualified a director of Thomson Reuter. He is the Greater London Authority. from the International Centre for Pensions Policy and he has previously as a barrister and was also an associate also on the board of The Institute of Women Leaders, Cranfield School of worked in the CBI’s public services of the Chartered Insurance Institute. Directors as a Non-Executive Director. Trevor is the recipient of several honorary Management. Her research has gained team as Head of Public Procurement. Prior to joining National Grid she was doctorates, the OBE, and was awarded several international awards. Doyin General Counsel and Company Secretary Ken is a Freeman of the City of London; the Chevalier de la Legion d’Honneur is Research Lead of the Black British Neil joined the CBI in 2004 after of Babcock International Group PLC. Past Master of the Worshipful Company by the French Government in 2007. Business Awards, which recognises, completing a postgraduate degree of Information Technologists; a Director rewards and celebrates exceptional at the London School of Economics of the Thomson Reuters Foundation; performance and outstanding in industrial relations. Before this, Chairman of Thames Reach (for which achievements of black people in he worked as an HR consultant for a he received an OBE in 2010); Chairman businesses operating in Great Britain. number of major financial institutions. of Shaw Trust, was an original member of IPSA (Independent Parliamentary Prior to her academic career, Doyin Standard Authority) and Founder and worked as Lead Consultant in OPP Ltd, Chairman of the Powerlist Foundation. In a pan-Europe business psychology 2009, he was named the Sunday Times consultancy, specialising in assessment Not for Profit Non-Executive Director of & recruitment, talent development, the year. Ken was voted number one in executive coaching and team the Powerlist’s Top 10 most influential building facilitation, for nine years. British black people in 2016. In 2015 Her Majesty the Queen, appointed him as her Lord-Lieutenant of Greater London.

70 A Report into the Ethnic Diversity of UK Boards 71 Tom Shropshire Shabbir Somani Yvonne Thompson CBE Professor Susan Vinnicombe CBE Amy Winepress

Tom is a Partner in the Corporate Shabbir is an Audit Senior Manager at EY, For the last 30 years, Yvonne, as Susan’s research interests focus on the Amy Winepress is an Audit Director at department of the global law firm, working with a range of companies across an entrepreneur has worked in the lack of women in leadership, specifically EY. She advises a range of listed clients Linklaters LLP, and a member of its several industry sectors. Before moving Communications, Marketing and PR on corporate boards; women’s leadership across several industry sectors, working Executive Committee in his role as Global to London, Shabbir was based in Dubai. industry. During this time she has styles and the issues involved in women with diverse international teams. Amy Head of the US Practice. Tom is also co- advised corporates, public sector, developing their executive careers. was based in New York for two years head of the firm’s Operational Intelligence Shabbir is part of EY’s CareerWatch and educational establishments and Susan was Founder Director of the and on her return to London, spent Group. Tom has been based in London EDGE programmes, which are focused on government, developing a stellar Cranfield International Centre for Women 18 months working as Chief of Staff to for nearly 20 years. Tom advises on M&A progression of diverse, high performing reputation as being an activist and a Leaders from 1999 to 2016 and the EY’s UK&I Chairman, Steve Varley. and equity capital markets transactions leadership talent within the firm. campaigner for supporting women Deloitte Ellen Gabriel Endowed Chair in in the US, Europe and South Africa. Tom and minorities in business, as well as Women’s Leadership at Simmons College Amy has led EY’s contribution also regularly advises UK and global As well as assisting Amy Winepress in tirelessly championing equality and (Boston) from 2013-2016. She and her to the Parker Review. corporates on governance, sustainability, EY’s contribution to the Parker Review, diversity, particularly in the workplace. co-authors produce the annual Female enterprise risk and regulatory change. Shabbir is committed to mentoring FTSE Board Report, which she launched other ethnic minority colleagues, In 2003 she received a CBE in Her in 1999 and is regarded as the premier From 2011-2014, Tom was a member supporting EY’s diversity objectives. Majesty Queen Elizabeth II Birthday research resource on women directors of Linklaters’ Partnership Board. Tom Honours List for her work with small in the UK and is renowned globally. is also the past-chair of Linklaters business, women and minorities. In Global Corporate Responsibility 2005 she received a doctorate for her Susan is the Founder and Chair of the Committee. Tom is currently a Trustee work with women and minorities in small judges for Women in the City Awards of Prostate Cancer UK and in each of businesses and supporting entrepreneurs and is a judge for the Sunday Times best 2016 and 2017 was noted as one of from London Metropolitan University, NEDs of the year awards. She is Vice the top ethnic minority executives in and in 2015 she received her second Patron of the charity, Working Families. the UK and US. Tom is a UK and US doctorate for work in Global Diversity Susan was a member of the Davies citizen, a graduate of the University of and Equality from Plymouth University. Steering Committee from 2010 – 2015 Southern California, and obtained his and has been invited onto the Advisory Juris Doctor and Masters of Business In 2015 she published her first book, Board of Sir Philip Hampton/Dame Administration (Finance & International “7 Traits of Highly Successful Women Helen Alexander’s Review on the lack Business) from New York University. on Boards”. A book promoting greater of women in the executive pipeline. gender diversity in company board rooms, it charts the rise to the top of 22 female boardroom executives, distilling seven key traits of their success in the process. An Amazon Best Seller in 3 categories before it was released, Dr Thompson has since gone on to inspire thousands of women careerists in public, private, educational and charitable sectors globally.

72 A Report into the Ethnic Diversity of UK Boards 73