The Analysis Editor’s Letter


A changing face


Stephen Kiely Editor, CCRMagazine stephen@ccrmagazine.co.uk


The Financial Conduct Authority (FCA) is consulting on changes to its Listing Rules to require listed companies to publish annually: lA ‘comply or explain statement’ on whether they have achieved certain proposed targets for gender and ethnic minority representation on their boards, and l As part of the same annual disclosure obligation, data on the make-up of their board and most senior level of executive management in terms of gender and ethnicity. The FCA is also proposing changes to its


disclosure and transparency rules to require companies to ensure any existing disclosure on diversity policies addresses key board committees and also considers broader aspects of diversity. This could include considerations of


ethnicity, sexual orientation, disability, lower socio-economic background and other diversity characteristics. The FCA also encourages companies to


provide further data on the result of their diversity policies considering these wider aspects where possible. The Listing Rule diversity targets are not


mandatory for companies to meet, so the FCA is not setting ‘quotas’, but providing a positive benchmark for issuers to report against. The proposals would apply to UK and


disclosure on diversity policies addresses key board committees and also considers broader aspects of diversity


any existing


overseas companies with equity shares in either the premium or standard listing segments of the FCA’s Official List, while the disclosure and transparency changes apply to companies with securities traded on UK regulated markets, such as the Main Market of the London Stock Exchange. While some companies may already provide diversity disclosures


to existing voluntarily UK initiatives and in annual reports, the FCA’s measures will help ensure reporting beyond the largest listed companies and ensure more consistency. Its approach also provides flexibility for overseas companies, since


the ‘comply or explain’ approach allows any national or cultural context to be explained. Clare Cole, drector of market oversight at the FCA said: “There is


a current lack of standardised and mandatory transparency about diversity on listed company boards, particularly outside the FTSE 350 who do not provide data to the voluntary initiatives in this area.


August 2021


The FCA is also proposing changes to its disclosure and transparency rules to require companies to ensure


But interest from investors is growing and companies are increasingly focusing on this topic due to ESG investing, as well as wider social and public policy concerns. “Our proposals are intended to increase


transparency by establishing better, comparable information on the diversity of companies’ boards and executive committees. This will provide better data for companies and investors to assess progress in these areas and make investment decisions, reduce investor search costs, and inform shareholder engagement, enhancing market integrity. “Over time, we expect enhanced


transparency may strengthen incentives for companies towards greater diversity on their boards and encourage a more strategic approach to diversity in their pipeline of talent. This may have broader benefits in terms of the quality of corporate governance and company performance in due course.” The FCA’s proposals aim to build on


progress achieved under existing initiatives to improve diversity on the boards of the largest UK companies. Such initiatives include the Hampton-Alexander Review and Parker Review, and similar initiatives in international markets. The changes also follow the FCA’s


recent discussion paper published earlier in July, exploring how to promote diversity


and inclusion across the financial services sector as a whole. Diversity will be an ongoing focus for the FCA, beyond the proposals it sets out at this time. The FCA is consulting for 12 weeks on these proposals, with a


closing date of 22 October 2021. Subject to consultation feedback and FCA Board approval, it will seek to make relevant rules by late 2021. It will be interesting to see how this important issue continues to


be tackled over the coming period. It is clear that change needs to happen, and CCR and Arvato Financial Solutions are playing our part in this with the launch of Inclusion In Credit. I hope that read- ers will want to take part in this important endeavour. Before, I go, I should add that the article, last month on pages 32-


33 should have noted that the figures came from the Lloyds Bank UK Recovery Tracker. Enjoy the magazine!


www.CCRMagazine.com 3


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52