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Freshfields Risk & Compliance

| 4 minutes read

FTSE Women Leaders Review: the findings and recommendations

As the UK emerges out of the Covid-19 pandemic, there is an even greater focus on the positive role diversity can play in improving company performance, with companies and business leaders acutely aware that the pandemic may have impacted working women more adversely than their male counterparts in terms of career development and progression. Against that backdrop, the publication of the ‘FTSE Women Leaders’ Review (the Review) on 22 February was eagerly anticipated.

This Review, the third and successor phase to the Davies Review and more recently, the Hampton Alexander Review (the results of which were published in February 2021, on which, see our article here), continues the push to achieve gender balance, refreshing the focus on female representation on boards and in senior executive positions.  Importantly, the Review has also now set a refreshed set of targets for listed companies (and, for the first time, has set targets for large private companies).

The Review’s findings 

As with the Hampton-Alexander Review, the overall picture presented by the Review is largely positive. Key highlights from the Review include:

  • female representation on boards stands at an average of 39.1 per cent across the FTSE 100, 36.8 per cent across the FTSE 250 and 37.6 per cent for the FTSE 350 which are all improvements from the year before;
  • the representation of women in FTSE 100 leadership roles (the combined executive committee and direct reports) has risen to 32.5 per cent from 30.6 percent; and
  • there are only six companies with “one and done” boards (a phrase used to describe the potentially tokenistic appointment of one woman to a board). This is a significant decrease from 74 at the end of 2018.

These positive results mean, according to the UK government, that the UK is now second in international rankings for women’s representation on boards at FTSE 100 level (behind France).

Areas for improvement 

Despite the rosy outlook, there is certainly still room for improvement:

  • The Review notes that the number of female CEOs remains “flat and stubbornly low”.
  • In FTSE 100 leadership positions, women seem to be siloed into specific roles – for example, while 55 per cent of Company Secretaries and 67 per cent of Human Resource Directors are women, they only make up 16 per cent of Finance Directors and 20 per cent of Chief Information Officers.
  • In the FTSE 250, the representation of women in “Leadership” (i.e. the combined Executive Committee and Direct Reports) has improved but still only sits at 30.7 per cent.
  • The Review also notes that the appointment rate of women into leadership roles continues to be low with 62 per cent of all roles at this level going to men.

It is important to remember that the headline Review figures for the FTSE 100 and FTSE 250 provide an average of the diversity statistics across those companies. Delving into the detail on a company by company basis often reveals a less positive picture of the progress that has been made and demonstrates that many companies are yet to hit the published targets.  In addition, there were a number of companies that hit the target of 33 per cent of women on boards (and the two levels below) in 2020 but have since fallen behind. This is perhaps an indication that even for companies who have, on paper, achieved better female representation at a board and senior executive level, improving and maintaining diversity is an ongoing challenge for all, requiring structural but also cultural changes. As the Review notes, progress on diversity is fragile and change takes time to become safely embedded within an institution.

Investors should also take heed of the Review findings. The arguments in favour of a diverse leadership team are not new: more diverse companies are more likely to outperform less diverse peers on profitability (as set out in a 2020 McKinsey report), something highlighted by the Rt Hon Kwasi Kwarteng in his speech during the launch of the Review. Diversity is also becoming part and parcel of an investor’s review of a company’s ESG risks and opportunities. The Review notes that IVIS will continue its practice of issuing warnings for companies with 33 per cent or fewer women on its boards.

What is next? 

To build on the progress achieved by the Hampton-Alexander Review, the Review sets out 4 recommendations:

  • The voluntary target for FTSE 350 boards and for FTSE 350 leadership teams is increased to a minimum of 40 per cent women’s representation by the end of 2025 – an ambitious but not unachievable target.
  • FTSE 350 companies should have at least one woman in the role of Chair orSenior Independent Director and/or one woman in the Chief Executive Officer or Finance Director role by the end of 2025.
  • Key stakeholders should continue to set best practice guidelines or use alternative mechanisms to encourage any FTSE 350 Board that has not yet achieved the previous 33% target for the end of 2020, to do so.
  • The scope of the Review is extended beyond FTSE 350 companies to include the largest 50 private companies in the UK by sales.

Recommendation 4 is particularly interesting. The Review states that ‘private companies’ includes private equity owned companies, partnerships, entrepreneur/founder owned or family owned companies, or companies owned directly by management and staff. However, how ‘sales’ are to be measured, over what period and by whom (and, importantly, how any given company will know whether or not it is in the top 50), is unclear from information currently available. There has been speculation as to the companies that may fall into this group, but the definition and measurement of ‘sales’ may bring into a scope a very different type of company than the retail giants that have been the subject of press commentary to date.

How companies achieve these new targets is another question. In the interesting panel discussion held as part of the launch of the Review, the speakers highlighted that companies need to make changes to their fundamental culture and ethos to encourage greater diversity, but that day-to-day practical changes were also needed to ensure that aspirations were supported and translated into tangible results e.g. empowering male managers to support female colleagues, being aware of who is attending virtual calls, and thinking about working practices.

Ultimately this Review heralds a brighter future in terms of boardroom gender diversity, but flags that there is still much to be done. Gender diversity is just one of the many governance issues that investors, shareholders and boards should be and are considering. However, the benefits of a diverse workforce seem ever more persuasive as businesses look to navigate the challenges of a post-pandemic world and new ways of working.


diversity and inclusion, corporate governance