Board diversity and inclusion reporting obligations
The FCA's diversity and inclusion rules for listed companies, introduced through Policy Statement PS22/3 and now embedded in the Listing Rules (LR 9.8.6R and equivalent), require premium and standard listed issuers to report annually against diversity targets and to disclose the composition of their boards and executive management committees. The targets — that 40% of board members should be women, that at least one of the senior board positions (Chair, CEO, CFO, or SID) should be held by a woman, and that at least one board member should be from a non-white ethnic minority background — are expressed as aspirational targets rather than mandatory quotas, but compliance on a 'comply or explain' basis means that firms must disclose their current position and, where they fall short, explain why and what they are doing to address it.
The data collection obligations under these rules are more technically demanding than the disclosure obligations themselves. Firms must collect and report diversity data for board and executive committee members, and must do so in a way that is consistent with the data protection requirements under UK GDPR. The FCA permits the use of numerical data without identifying individuals, and permits firms to disclose where data collection was incomplete due to non-response, but expects firms to make genuine efforts to collect the information. A reported non-response rate above 20% for any category is likely to attract scrutiny.
The FCA has separate diversity and inclusion expectations for regulated firms under SYSC, particularly for firms subject to PRA oversight (through SS5/16 on board diversity) and for FCA-regulated firms under SYSC 4.3A. These rules require diversity to be considered in succession planning and board appointments, but do not impose the same prescriptive reporting requirements as the listing rules. The FCA's broader D&I consultation (CP23/20) proposed extending mandatory diversity and inclusion policy and reporting requirements to a much wider range of regulated firms — including requirements to collect and report workforce diversity data across all roles, not just boards. Following extensive industry feedback, the FCA confirmed in 2024 that it would not proceed with the full set of proposals in CP23/20 as originally drafted, but signalled ongoing supervisory interest in D&I as a governance and culture indicator.
For firms not within the listed company reporting regime, board diversity remains relevant as an indicator of good governance and as a factor the FCA and PRA consider in assessing fitness and propriety of governing bodies. Both regulators have stated that they expect boards to demonstrate genuine cognitive diversity — meaning diversity of perspective and experience, not merely demographic representation — and that nominations committees should be able to explain their approach to inclusive recruitment.
Practical steps for compliance
Listed firms should review their annual report disclosures against the specific data tables required by the Listing Rules, ensure their data collection process is documented and legally compliant, and consider whether their current board composition trajectory requires an updated succession plan. Regulated but unlisted firms should review their SYSC 4.3A governance documentation to ensure diversity considerations are embedded in board appointment and review processes.