Dated: 15 December 2010

Responding to the CBI’s suggestion today that the Corporate Governance Code should be rewritten requiring companies to set their own targets for board gender diversity, the IoD has the following points to make:

• While we share the CBI’s wish to see a higher level of female participation on company boards, targets of any kind are just quick-fix solutions which do not address the underlying problem, which is the low female presence amongst the ranks of senior executives. The CBI made many sensible suggestions in its submission to the Davies review on how we could increase these numbers, including developing the female talent pipeline and opening up the board recruitment process, which the IoD supports.

• We are pleased to see that the CBI is not in favour of gender quotas or a national gender targets for board appointments. These policy options do not have the support of most company directors, and would be detrimental to UK corporate governance.

• The CBI’s proposal for each company to define its own target, and then report on progress is a less harmful option than quotas or national targets. But it is still undesirable. It focuses unjustifiable emphasis on gender diversity in comparison to other dimensions of diversity, eg experience, professional background, personality, age, nationality, etc.

• Including the CBI’s proposal in the UK Corporate Governance Code increases the risk that the Code become politicised and removed from commercial realities. This would benefit neither the companies it applies to, nor the groups which are currently under-represented on boards.

Commenting on subject, Miles Templeman, Director-General of the IoD, said:
“There are no short cuts to greater gender diversity in the boardroom. As in other areas of corporate governance, the Government should focus on long-term solutions rather than measures – such as board quotas or targets – that merely mask the symptoms of the problem.
“Efforts to improve female participation in boardrooms should be aimed at the source of the problem – a low female presence in executive management – and should not constrain the abilities of boards and shareholders to make director appointments on the basis of merit and the needs of their specific organisation.”