In a bid to prompt companies to bring more women onto boards, The Association of British Insurers (ABI), the UK’s leading shareholder group, has announced plans to issue new guidelines in the autumn. Mark Spinner, partner at international law firm Eversheds, comments:
“The announcement by the ABI is the latest of a number of moves to promote greater gender diversity and comes hard on the heels of the European Union plans to impose quotas which, in my view, are still some way off.
“Gender diversity is generally accepted as a good thing and there are now a number of reports (including the Eversheds Board Report), which indicate that there is a positive correlation between greater female representation and better company (share price) performance. However, there is not much support outside of political circles for the introduction of quotas with the majority of corporates. As part of the research undertaken for the Eversheds Board Report, it was found that, whilst the majority of directors interviewed were in favour of diversity in the boardroom, only one was positively in favour of the introduction of quotas to achieve this.
“Like the majority of clients and industry bodies we talk to, I am more in favour of a voluntary code, where details of the diversity policy and statistics regarding its success are required to be published rather than compulsory quotas.
“The vast majority of directors we have spoken to are concerned that the introduction of quotas will result in a move away from merit based selection in order to deliver against arbitrary quotas. The real issue is for companies to make sure that the selection criteria used for new board appointees are set in such a way so as to ensure that the balance of desired skills and attributes identified as being needed (and which come from a more diverse board) have greater prominence. This should result in a decreasing importance being placed on ‘previous experience’.
“Gender diversity is not the only issue to be considered when examining boardroom make-up. It is important that boards are balanced and have a broad spectrum of skills available. Nationality diversity, for example, is increasingly important for those companies with an international footprint and/or customer/supplier base.
“Another important issue that needs to be addressed is a widening of the selection pool from which candidates are selected. Whilst the central selection pool remains restricted to FTSE100/250 companies, improving gender diversity will continue to be challenging since there are already far too few women to choose from. Companies need to look outside the conventional hunting grounds to, for example, the public sector/civil service, and/or the education and healthcare sectors where there tend to be a higher proportion of women in senior positions with appropriate and relevant experience and transferrable skills sets.”
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