7.2.5.5 Diversity

The UK Corporate Governance Code is rather brief on diversity. The supporting principle of chapter B.2 on appointments of the board states: ‘The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender’. More is not provided for in the United Kingdom. Therefore, the Financial Reporting Council asked Lord Davies of Abersoch to conduct research on gender diversity on the board in 2010. The resulting report was published in February 2011 and the FRC started a consultation round to investigate whether amendments in this field of the UKCGC were desirable (Financial Reporting Council 2011: 1-2).

The result of the consultation is that the FRC will amend the UKCGC as from 1 October 2012. Code provision B.2.4 about the mandatory section in the annual report on the work of nomination committee will be extended by the following requirement: ‘This section should include a description of the board’s policy on diversity, including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving the objectives.’ (Financial Reporting Council 2011: 11) This means that a company should have a clear policy regarding diversity, and a clear path to reach the desired diversity, but there are no quorum requirements or any other objectives. Although the task of Lord Davies of Abersoch focused on gender diversity, the final supporting principle in the UKCGC mentions diversity in general. However, by explicitly mentioning ‘including gender’, the FRC emphasises that gender diversity is a key area within diversity.