The Association of British Insurers has urged companies to increase the numbers of female directors on boards, as shareholders will this week issue their first set of guidelines on how to improve board performance. Mark Spinner, partner at international law firm Eversheds, comments on the impact that boardroom composition can have on business performance:
“There is a growing body of evidence that suggests that adherence to good corporate governance leads to improved performance. Having a balanced Board in terms of diversity - including gender diversity - and skill sets allows businesses to minimise “Groupthink” and ensure that there is true independence of thought, which is the mainstay of effective Board performance and governance.
“Although there has been a significant improvement in the number of women appointed to FTSE Boards since the publication of the Davies Report in February this year, and in fact more female Board appointments have been made in the last 6 months than the whole of the previous 12 months, there is still some way to go before Boardroom Britain can say that it has achieved the aspirational target of 25% female representation by 2015, which was set out for FTSE 100 companies by Lord Davies.
“There is strong political support both in the UK and in Europe for, in particular, greater gender diversity, but more still needs to be done if we are to avoid the inevitable imposition of quota’s, as has happened in a number of European countries. The ‘comply or explain’ principles based system currently enjoyed by UK companies, and advocated by Lord Davies, concerning boardroom diversity will, in my view, only work where there is appropriate shareholder interest and/or engagement regarding board composition and the companies themselves provide adequate and meaningful information regarding their approach in this area.”
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