UK’s FCA sets rules on diversity disclosure
It is often commented that the ‘S’ and ‘G’ of ESG – environment, social and governance – lag behind the ‘E’ in the priorities of regulators and standards setters, but that seems to be beginning to change.
The UK’s Financial Conduct Authority (FCA) has finalised new diversity disclosure rules for listed companies, aiming to make it easier for investors to see how well women and ethnic minorities are represented on their senior leadership teams. Sarah Pritchard, Executive Director of Markets at the FCA, states: “As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress.”
Companies will need to report against diversity targets on a ‘comply or explain’ basis, for financial accounting periods starting from 1 April 2022. Among the targets, at least 40% of board members should be women, including at least one senior board position, and at least one member should be from an ethnic minority background. The FCA notes that it will review the effectiveness and appropriateness of the rules in three years’ time – and meanwhile we anticipate action in this arena in other jurisdictions.
We also noticed this week that Aviva has published the first annual report in the UK to include a range of ESG information in digitally tagged format. The UK has its own reporting rules (the ‘SECR‘) in this area for the moment, but plans to adopt the ISSB standards as soon as practicable. Congratulations to Aviva, Workiva and all involved.
Read more here.