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Diversity in the boardroom: The underrepresented gender

Posted on 9 November 2022

Diversity on corporate boards is a hot topic across the business world and is increasingly being reported on. Last month, Cranfield School of Management published its Female FTSE Board Report. The report analyses the representation of women directors on FTSE 350 corporate boards. It found that women held 393 directorship roles across FTSE 100 boards, equivalent to 37.7% as at June 2021.  

We take a deeper look into the gender diversity targets in place across the UK and consider the successes to date as well as areas which still need improvement and focus over the next few years.

How is gender diversity measured in boardrooms in the UK?

The UK does not have any mandatory quotas for female representation in boardrooms, only voluntary targets. The targets have been adapted over the last decade to apply to a wider range of companies and roles.

The Davies Review came out of the 2011 Davies Report which recommended that the UK implement a voluntary quota. The initial target was for the FTSE 100 to achieve at least 25% female representation on their boards. This was later amended to 33% in 2015.

In 2016, the Hampton-Alexander Review was published. Its purpose was to extend the voluntary quotas to beyond the boardroom. The Hampton-Alexander review implemented a target for the FTSE 100 to achieve 33% female representation across all of their all-important leadership roles by the end of 2020.

Following the success of the Davies and Hampton-Alexander Reviews, the FTSE Women Leaders Review was published and is ongoing. The latest report (published in February this year) extends the review of female representation to 24,000 of the most senior roles in public listed companies – including leadership roles and board roles across the FTSE 350.

The current position

Each of the above reports show that there has been significant progress in female representation both on boards and in leadership roles across the UK, so much so that higher targets have been implemented on several occasions. Overall, today 85% of the FTSE 100 have met or exceeded the target to have 33% of board positions held by women and almost half of the FTSE 100 now have 40% or more women on their board.

What next?

Despite the progress to date, there is still improvement to be made. According to reports, there are still 16 companies in the FTSE 350 which have an all-male executive committee. The figure has significantly improved from 5 years ago, where 54 companies had an all-male executive committee, however it still shows that there is work to be done to achieve gender equality. Overall, there is a clear shift to focus on "achieving gender balance". There is also focus on meeting targets outside of boardrooms in senior leadership roles – particularly in the role of Chief Executive Officer where a staggering 96% of the FTSE 350 have male CEO's.

The FTSE Women Leaders Review has set the following recommendations:

  1. An increased voluntary target for FTSE 350 boards and leadership teams to a minimum of 40% women, by the end of 2025
  2. FTSE 350 companies to have at least one woman in the Chair or Senior Independent Director role on the board, and/or one woman in the CEO or Finance Director role in the company, by the end of 2025
  3. Key stakeholders to set best-practice guidance, or have mechanisms in place to encourage FTSE 350 Boards that have not achieved the prior 33% target, to do so
  4. The scope of the Review is extended to include the largest 50 private companies in the UK by sales

These targets show the focus points over the coming years. As Cranfield's report sets out, there are still specific roles which lack female representation. The fact that there is only a handful of women in CEO roles indicates a long-term problem and suggests that succession planning, diversity and evaluation need to become a key focus for companies to improve this. In addition, the report also found that only 14% of Chair roles across the FTSE 100 and FTSE 250 are held by women.

Do we need mandatory targets?

Whilst the UK has voluntary targets, other countries have opted for a mandatory quota.

Earlier this year, the EU agreed to implement its first ever quota for gender representation on corporate boards. From 30 June 2026, all listed companies in EU member states will be required to have at least 40% of the "underrepresented gender" (usually, but not always, women) represented on their non-executive board seats. Last month, the European Council approved the new law.

Mandatory quotas are not new and in the EU in particular, progress has been slow. It has taken 10 years since the EU first proposed the idea for gender balance on corporate boards for the new law to be approved.

A handful of countries are leading the way on mandatory targets. France – the leading member state in terms of equal gender representation on boards – has had a mandatory quota in place since 2011 which applies to listed and non-listed companies which have more than 500 employees. Italy, Belgium, Germany, Austria, Portugal, Greece and the Netherlands also have national mandatory quotas for listed companies in place.

The UK is in second position to France in Europe in terms of the percentage of boardroom roles held by women. So, is there any need to introduce a mandatory target to improve this? Research to date suggests that the introduction of quotas – mandatory or voluntary - is the most-effective reason for an increase in female board presence:

  • Since introducing the voluntary quota, the UK has seen representation of women in boardrooms increase from just 12.5%
  • According to Reuters, in 2011, the year France introduced its mandatory quota, women in EU member states represented just 13% of boardroom roles. The average representation now across the eight member states who have adopted mandatory quotas for women has risen to 36.4%.
  • EU member states who have adopted softer measures to ensure women are equally represented in the boardroom (Denmark, Estonia, Ireland, Spain, Luxembourg, Poland, Romania, Slovenia, Finland and Sweden) now have women represented in 30.3% of their boardroom roles on average.
  • Those EU member states who are yet to take any substantial action on gender equality in boardrooms have women in, on average, just 16.6% of boardroom roles according to the European Institute for Gender Equality.

Although the overall statistics show that, as a whole, FTSE companies are achieving the voluntary targets which have been set in the UK, there is still a huge variance across individual FTSE companies – with the FTSE 250 varying from 11% to 67% of female representation in their board. This suggests that, although voluntary quotas are an overall success story, mandatory quotas may be necessary to ensure that gender balance is achieved in key leadership roles across all companies.

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