Research conducted by Cranfield University's School of Management has found that more than half of FTSE 250 companies (52%) fail to mention ethnicity in their board diversity policy, and that most of the FTSE 350 do not set measurable ethnicity targets.
Published by the Financial Reporting Council (FRC), the research found that just 14% of FTSE 100 companies set measurable objectives for board ethnic diversity. For FTSE 250 companies it is just 2%. No FTSE 350 companies report progress against measurable objectives.
The FRC said it expects improved reporting under the new UK Corporate Governance Code, which promotes diversity in appointments and succession plans, including ethnic diversity.
Regarding succession, the research found that 11% of FTSE 100 companies and 4% of FTSE 250 companies plan to increase ethnic diversity in the succession pipeline. However, most focus on "general progression rather than specifically focusing on senior management."
Additionally, the 2020 Parker Review, which includes the research published conducted by the Cranfield School and published by the FRC, suggests 150 companies out of 256 did not have at least one director of colour on their boards.
Some 37% of FTSE 100 companies and 69% of FTSE 250 companies do not currently meet the Parker Review target.
The Parker Review recommends each FTSE 100 board should have at least one director of colour by 2021 and for the FTSE 250 by 2024.
According to the reseach 3% of FTSE 100 and 11% of the FTSE 250 do not have a policy on board diversity.
Jon Thompson, CEO of the FRC, said: "The UK's record on boardroom ethnicity is poor. It is unacceptable that talented people are being excluded from succession and leadership simply because companies are failing to put in place appropriate policies on boardroom ethnicity, are not setting targets or are not monitoring their progress against policies. A more diverse boardroom leads to better business outcomes, which is why the UK Corporate Governance Code, and now the UK Stewardship Code, requires companies and investors to promote diversity and inclusion. We will monitor closely how companies report on their policies or explain their lack of progress, in this area."
The UK Corporate Governance Code was strengthened in 2018 to promote diversity including of gender, social and ethnic backgrounds in UK boardrooms. A separate section of the annual report should include a description of the board's policy on diversity, including any measurable objectives it has set, and progress on achieving those objectives.