New Disclosure Listing Rules On:
Diversity And Inclusion
Applying From 1 April 2022
FCA PS22/3 20 April 2022
New Listing Rules disclosures on Diversity and Inclusion were announced by the FCA on 20 April 2022.
In short, a new statement in the annual report is needed on whether specific diversity targets have been met. In addition, requirements for expanded disclosures on diversity in board committees, policy for the board and committees on diversity and to flag wider diversity criteria.
The new annual report disclosure statement will apply, as at a chosen reference date, against these specified targets:
- 40% or more of the board should be women
- One or more of the Chair, Senior Independent Director, CEO or CFO is a woman
- One or more of the board must be from a non-white ethnic background.
In addition, disclosure in annual financial statements in standard numerical form will show the gender and ethnicity of both the Board, and the executive management.
Women include those defined by sex, and self-identifying women.
These requirements apply to Standard and Premium Listed Companies for reporting periods starting on or after 1 April 2022.
The normal “comply or explain” rule applies.
The data collection process is another disclosure issue, and consistency of approach between individuals, targets and numerical results is expected.
Another new disclosure is to explain in the company’s corporate governance statement the diversity policy applying to the board or explain why, if no such policy applies.
There is flexibility to cope with Data Privacy concerns, and to mesh neatly with current Companies Act requirements. When this is in point companies should disclose their approach.
If the reference date is changed between disclosures, then the reason why must be disclosed.
Any board changes between the reference date and the date the annual financial report is approved which influence compliance with the targets must be disclosed
The rules also cover closed end investment funds (“Investment Trusts”) and sovereign controlled commercial enterprises. Excluded are open ended investment companies, shell companies (FCA defined) and debt issuers.
Extra voluntary disclosures may include:
- A summary of key policies, procedures and processes and any wider context which contributes to improved diversity of the board and executive management.
- Mitigating factors or circumstances which may impinge on compliance (e.g., small size or county or primary operation)
- Any foreseen risks in continuing to meet, or meeting the requirements in the next accounting period, or any plans to improve board diversity.
Declaration on the Rights of Woman
Olympe de Gouges
Article 10: “woman has the right to mount the scaffold, so she should have the right equally to mount the rostrum”