Report shows glaring lack of diversity in UK boardrooms

UK firms may end up paying a financial price for a lack of boardroom diversity after a report revealed the overwhelming presence of white males in leadership roles at small cap UK firms.

The warning came from Alexandra Altinger, chief executive of JO Hambro Capital who noted that investors are increasingly shifting their focus to ESG.

According to professional services group Company Matters, 96% of the directors of firms listed on the Alternative Investment Market (AIM) and 95% of the FTSE Small Cap 100 are white.

Of the 324 positions on AIM UK 50 boards, just three directors were black and none were executives.

The smaller companies lag some way behind larger blue-chip companies on the FTSE 100 and FTSE 350 where ethnic representation stands at 11%.

The statistics were not much better in terms of gender diversity with women outnumbered by 16:1 (94% versus 6%) when it came to executive roles in the AIM UK 50.

Furthermore, just two of the AIM UK 50 and seven of Small Cap 100 companies set measurable objectives for board diversity.

Altinger described the findings as “worrying” given the large number of people employed by the businesses and the need for visible role models in senior leadership to rectify imbalances.

She also warned that smaller UK companies could find it harder to attract support from investors who are increasingly factoring ESG considerations into their investment decisions. 

“Diversity, as well as being a moral issue, is soon likely to become a financial and regulatory hurdle for businesses. As investors shift their focus to ESG, otherwise strong firms might find themselves let down by their failure to address diversity issues within their corporate governance strategy,” said Altinger.

© 2021 funds europe

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