The Association of British Insurers (ABI), the members of which control around 15 per cent of the UK stock market, is to begin scrutinizing the number of women on boards in a move that could lead to more companies being challenged by shareholders over board diversity.
‘The ABI’s Institutional Voting Information Service, which monitors corporate governance standards, will this year, for the first time, monitor boards’ approach to diversity,’ writes Maggie Craig, the acting director-general of the ABI, in a column for the Telegraph.
‘This will allow investors to challenge boards on diversity and after a year we will be able to report back on what we have found.’
The move comes amid a major debate in the UK about how to tackle the low number of female directors at listed companies.
In 2009, women made up just 12 per cent of FTSE 100 directors, while the proportion at FTSE 250 companies was even lower at only 7 per cent, according to research from Cranfield University.
Later this month, Lord Davies of Abersoch will release a major report on the issue commissioned by the UK government last year.
Improving diversity will help boards avoid group think, which is more likely to occur if board members have similar backgrounds and experiences, says Craig.
She rejects enforcing female quotas as the way to bring about change, however. ‘The skills and experiences of the individuals need to be relevant and individual boards will require different mixes of members at different times,’ Craig writes.
UK companies are set to avoid quotas after Lord Davies confirmed this weekend that he did not support the practice.