Clifford Chance

Diversity and inclusion on company boards and executive management: FCA policy statement

6 May 2022

On 20 April 2022, the FCA published a policy statement (PS22/3) setting out its final policy decision on proposals set out in a consultation (CP21/24) launched in July 2021 to improve transparency on the diversity of listed company boards and their executive management teams. The measures being implemented are broadly similar to the proposals on which the FCA consulted, with the exception of changes to address concerns raised in consultation responses around the basis for reporting on the representation of women and feedback relating to overseas data protection laws. The new rules apply to accounting periods starting on or after 1 April 2022. However, the FCA is encouraging companies whose financial years began on or after 1 January 2022 to consider reporting on the targets and making the numerical disclosures required by the new rules in relation to their current accounting period on a voluntary basis.

The Listing Rules and Disclosure Guidance and Transparency Rules (Diversity and Inclusion) Instrument 2022 amends: (i) the Listing Rules (LRs) to require listed companies to publish annually: (a) a 'comply or explain statement' on whether they have achieved certain board diversity targets; (b) numerical data on the sex or gender identity and ethnicity diversity of their boards, senior board positions and executive management; and (c) an explanation of their approach to collecting the data used for the purposes of these disclosures; and (ii) the Disclosure Guidance and Transparency Rules (DTRs) to require companies to ensure that any existing disclosure on diversity policies and their results addresses key board committees and also considers broader aspects of diversity, such as ethnicity, sexual orientation, disability and socio-economic background.

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