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Chuka Umunna and Vince Cable: There are more women on boards, now tackle ethnic diversity too

October 30, 2015 1:02 PM
By Chuka Umunna MP and Vince Cable in The Evening Standard

It is rare that an issue can defeat the partisanship that characterises our politics but the campaign to transform business leadership in this country to reflect modern Britain has bucked the trend.

In 2010, a Liberal Democrat Business Secretary in the Conservative-led Coalition Government commissioned Mervyn Davies, Labour peer and businessman, to lead a review into the gender diversity of corporate boards. Women then made up just 12.5 per cent of boards and there were 21 all-male boards in the FTSE 100.

Lord Davies reported a year later, making a number of recommendations to effect a culture change, with a target of 25 per cent of FTSE-100 boards overall to be made up of women.

Importantly, he made clear that government should reserve the right to introduce more prescriptive alternatives if the recommended business-led approach did not achieve sufficient change. The initial reaction of some businesses was not encouraging. It required leadership from groups such as the CBI, the Institute of Directors, the women's 30% Club as well as the Secretary of State to get top companies, recruitment agencies and institutional investors to act.

The result: in 2015 there are no all-male boards in the FTSE 100 and 26.1 per cent of board members overall are women. Yes, more progress needs to be made, especially with respect to executive directorships (where there are still disappointingly few women) but cross-party political action has worked.

But if gender diversity has increased, the ethnic diversity of our boards has gone into reverse. The latest survey by executive recruiter Green Park of 10,000 top business leaders shows the number of visible ethnic minority CEOs is falling and the number of all-white boards is increasing. Yet 14 per cent of the population is from a black or minority ethnic background. Today there are just four non-white CEOs of FTSE-100 companies following the departure of Tidjane Thiam from Prudential earlier this year.

We cannot carry on like this. It sends a terrible message to young Britons of ethnic minority heritage. It fails to make the most of the family connections and cultural understanding of emerging markets that diaspora communities can bring. Progress on gender shows that where there is political will, there is a way. Greater attention should be given to ethnic diversity in boardrooms. But how?

Let's set a goal now for ethnic minority representation on FTSE 100 boards to be met by 2020. The private sector initiative, the 2020 Campaign, led by Lenny Henry, Trevor Phillips and others, has suggested a target of no all-white boards in the FTSE 100 by 2020. Amend the 2006 Companies Act regulations to require companies to include a breakdown of the number of ethnic minority employees on boards, in senior management positions and in the company as a whole, for if we don't know the extent of under-representation, it is difficult to determine what needs to be done.

And, after Lord Davies delivers his final report into gender diversity in boardrooms tomorrow, commission him to do a similar review into ethnic diversity.

Chuka Umunna MP is Labour MP for Streatham. Vince Cable was Business Secretary from 2010 to 2015.