Most UK fashion companies fail to meet new executive diversity targets
On Wednesday, the UK’s Financial Conduct Authority published new targets for all public companies with the aim of increasing the representation of women and ethnic minorities on boards and in senior management positions.
According to the new requirements, companies must have at least 40% women on their board of directors and at least one person from a non-white minority ethnic group, as well as at least one woman in a leadership position as chairman. , CEO, CFO or senior independent director. Companies are required to report this information to the FCA and if they do not meet the requirements, they must “explain why”, the financial watchdog said.
A BoF analysis of the composition of 18 UK-listed fashion, clothing retail and clothing manufacturing companies found that only five of them meet the regulator’s three criteria: Burberry, the clothing retailer JD Sports, Next, Ted Baker and Coats Group, a yarn producer. , zippers and threads.
Frasers Group, the parent company of brands such as Sports Direct, Jack Wills, Agent Provocateur and Flannels, was the only company to fail to meet any of the FCA’s three targets. The company did not respond to requests for comment from BoF.
The most widely achieved target was the representation of ethnic minorities on the board, with 13 of the 18 companies already in compliance. Conversely, the majority of companies still fall short of the target of at least 40% women on boards, with only seven companies currently in compliance.
FCA’s decision marks the latest regulatory push for improved environmental, social and governance of the private sector. Fashion companies, in addition to being subject to scrutiny of their environmental footprint, are called upon to improve diversity and representation at decision-making levels.
A complicated solution
The new goals will force companies to play a bigger and more immediate role in addressing the “huge problem of under-representation” among women and minorities in fashion leadership, said Caroline Pill, a partner based at London from executive placement firm Kirk Palmer Associates.
But regulation could also increase the risk that some companies will resort to ticking the box rather than taking a longer-term approach and developing inclusive talent pools, experts say.
In response to international pressure (mainly from the United States) and in anticipation of new FCA guidelines, some companies had already begun to restrict their executive searches to a single segment of the population – typically women and/or candidates from of minorities, Pill said.
A well-balanced diversity, equity and inclusion strategy for companies will include some fixation on “ticking the boxes” – insofar as metrics help drive action and accountability – but greater emphasis about long-term planning and building a test bed, she said. .
“You always come back to the same problem, you have to find the best candidate for the role,” she said. “These regulations go in the right direction in terms of [the representation] should look like, but the reality is you have to create diversity early on…it doesn’t start at the C-suite level.”
The same goes for boards of directors. Companies that struggle to build a diverse board need to invest financial and other resources in developing women and minority executives to fill such roles, said Mark Lipton, a professor at the Parsons School of Design and adviser to boards of directors in the United States.
“Diverse board members most often come with little board experience and not investing in their ability to think and act in a board member role can be a recipe for failure. ‘failure,’ he said. “It’s a huge lost opportunity if these new members can’t be promoted to leadership positions like an officer or committee chair.”