TOP companies need to have greater ethnic diversity on their boards, otherwise they will not be able to compete in Asia, the author of a business report said.
Lord Mervyn Davies made the comments at the launch of his five-year study on gender equality that proposes a series of recommendations, including a target of all FTSE 350 boards having 33 per cent female representation by 2020.
If achieved, this would account for around 350 additional women in top positions in the private sector.
Earlier this year, the UK’s FTSE 100 reached a target of 25 per cent of board positions filled by women, which Lord Davies set in 2011.
At the KPMG offices last Thursday (29) where the Women on Boards report was unveiled, the former trade minister said: “We’ve got so much work to do on the whole issue of diversity at the top of companies. Business is not quite getting it, consumers should not be buying the products from these sorts of companies [which do not have diverse boards].
“Businesses need to get it now and so does the government, otherwise we are not going to be competitors in Asia.”
The review said further work and a renewed focus was required to increase women’s representation.
Women only account for 9.6 per cent of executive roles and only five women are chief executives at the major companies easyJet, Severn Trent, Royal Mail, Imperial Tobacco and Kingfisher.
Lord Davies requested an independent steering body to be set up to support companies and report back next year.
“We should focus on the executive layer of companies, we should be obsessive about holding CEOs to account,” Lord Davies said. “We should be demanding.”
Minister for women and equalities Nicky Morgan said a major milestone had been achieved, but added: “We were only halfway there and a level-playing field is needed for women to excel in the business world.”
Other recommendations from Lord Davies include increasing the numbers of women in the roles of chairs, senior directors and executive director positions.
Britain introduced the voluntary approach to boost the number of women in boardrooms in 2010, and is now ranked sixth in Europe, behind countries, such as Norway, Sweden and France, some of which have set mandatory quotas.
Labour’s former shadow business secretary Chuka Umunna urged the government to also begin focusing on ethnic diversity in business.
“If gender diversity has increased, the appalling lack of ethnic diversity in UK board rooms persists and has actually gone into reverse in 2015,” he said.
Umunna added he wanted ministers to set a target for ethnic minority representation to get rid of “all-white” boards among FTSE 100 companies within 10 years.
“Lord Davies has done a fine job on diversity. Now commission him to do what he has done on gender for ethnicity,” he added.
The report revealed that 55 per cent of the new female-held board directors were British, 20 per cent were American and just one appointment was held by an Indian woman that made up 0.5 per cent.
Business minister Baroness Neville-Rolfe said: “The UK’s top firms and female directors have led by example and demonstrated the valuable contribution women make. But the task is not over – by developing the pipeline of talent, more businesswomen will have the opportunity to succeed and more firms will benefit from the competitive advantage a diverse workforce brings.”