Listed firms make progress on ethnic diversity, but private companies fall behind

The UK's largest private companies are lagging behind the FTSE 350 when it comes to ethnic diversity on their boards, the Parker Review report for 2024 has found. 

In December 2023, only 44% of the UK's top 50 largest private companies had at least one ethnic minority director on their board, compared with 96% of FTSE 100 firms and 70% of those in the FTSE 250.

The government-backed Parker Review has set FTSE 250 organisations a target of having at least one ethnic minority board member by the end of 2024.

There are 12 ethnic minority CEOs in the FTSE 100, up from seven in 2022. There are also seven ethnic minority chairs, an increase from six.

People with ethnic minority backgrounds now hold 19% of all director positions in the FTSE 100, a rise of one percentage point from 2022. The number of companies with more than one ethnic minority director rose from 49 in 2022 to 56 in 2023.

In the FTSE 250 the proportion of all board directorships held by ethnic minority directors was 13.5%, and among the 50 largest private companies that were invited to share their data this was only 11%.

Seventy-nine per cent of the 222 FTSE 250 organisations that responded to the Parker Review's voluntary census, which is carried out by the Department for Business and Trade and sponsored by EY, say they have now met the "one by 2024" target.

Last year both listed companies and the UK's largest private companies were asked to set their own percentage targets for ethnic minority representation among senior management by the end of 2027.

The FTSE 100 companies that provided 2027 targets had an average target of 17% - a four percentage point rise on today's average of 13%. The average target among the FTSE 250 is 15.5%.

David Tyler, chair of the Parker Review Committee, said: "We've seen continued good progress this year on ethnic diversity across FTSE 350 boards. For the first time, we have authoritative data too on ethnic minority representation in senior management, revealing that 13% of FTSE 100 and 12% of FTSE 250 senior management teams are from ethnic minority backgrounds.

"The FTSE 250's progress towards its December 2024 deadline, for at least one ethnic minority director on each board, is encouraging, reaching 79% of those reporting. With the time remaining, we urge those FTSE 250 companies without an ethnic minority director to do what they reasonably can to reach the target."

However, EY's UK chair Hywell Ball said it is important for organisations not to lose sight of longer-term priorities such as this in the challenging economic environment.

"The Parker Review, and the targets that it sets, provide an important benchmark and objective criteria to increase the representation of ethnic minorities across UK business. Crucially, it ensures that efforts to diversify UK business are led from the top down and that, as leaders, we continue to be held accountable - regardless of the macroeconomic climate," said Ball.

"At EY we have a target to increase the proportion of ethnic minority partners in our UK business to 20% by 2025, of which 15% are to be Black. As of July 2023, 17% of our partners were from an ethnic minority background, of which 8.5% identify as Black or mixed Black Heritage. Whilst we are not yet where we want to be, we are steadfast in our commitment and taking action across all parts of our business to continue our progress."

Industry minister Nusrat Ghani said: "This report charts the UK's continued journey toward securing the best of the best talent - irrespective of ethnicity - into key roles at the very top of British business.

"I'm happy that since the launch last year, the Parker Review has worked to ensure we have increasingly inclusive business cultures, but there is still more to be done to guarantee British boardrooms and senior management teams are truly reflective of British society."

Laura Sanderson, UK lead and EMEA co-lead of executive search firm Russell Reynolds Associates, said it was encouraging that almost all FTSE 100 boards have ethnic minority representation, when in 2016 less than half did.

"However, today representation remains too low in the most senior roles, especially CEO and chair. Between them, these roles set the agenda of the board and the culture of their organisations. They have the potential to create lasting change in their communities, supply chains and for their customers," she said.

"Creating diverse teams, and quickly, is a business imperative. We see repeatedly that diverse leadership teams outperform those that are homogenous. Already in the first year of reporting, senior management representation is at 13%. Firms that are committed to creating change must set targets to reach parity with the UK population, or risk falling behind."