Governance Watch - Issue 12

By Dina Medland in London

Gender Diversity

One might think that gender diversity could be the easiest component to achieve of any bid to get true cognitive diversity around a boardroom table. But, despite a great deal of effort in the last six years from the U.K. government, CBI support, and cheerleading from a plethora of independent bodies - all well supported by coverage from the mainstream British business media - one sad fact remains true: progress on gender diversity in U.K. boardrooms seems to stall whenever it thinks nobody is watching.

This is not the place to dwell on ‘why is that, exactly?’ But it is a good place to ask what it is that needs to change. 

Helen Pitcher, Chair of this consultancy, put it well I thought when asked about the stalled progress on gender diversity in Britain’s boardrooms, as reported this week by the Financial Times

"It's not happening as fast as it might be. Why is that? One reason is that people don't think laterally enough about ability. There is a lack of creative thinking about how to fulfil the roles with the right calibre of women. It is, I am afraid, lazy thinking. It means that individuals with bags of potential get overlooked. With the right support and development, they might be a great asset to any business" she said.

“Overlooked” people and “lazy thinking” are both things a post-Brexit British economy with a recent history of productivity issues just cannot afford. Recruitment firms, often closely aligned with the same chairmen for years as they move from one boardroom to another, have little incentive to come up with names that are not ‘tried and tested in a plc role’ if they are in what used to be termed a ‘preferred supplier relationship.’ If it still is termed that it’s a travesty to innovation.

That appears, in a nutshell, to be one major reason for a lack of progress on gender diversity. Change can be progress– but change also requires people to move out of their seats, leaving them open for someone else to be positively recruited to sit in them.


Corporate Governance and U.K. Listing

I could have imagined it. But it felt as if there was a palpable gasp of breath earlier this week between the moment the embargoed press release from the UK’s financial watchdog, the Financial Conduct Authority (FCA) about the creation of a new category within the premium listing regime in the UK to cater for “companies controlled by a shareholder that is a sovereign country” landed in journalist inboxes – and the publication of the story. 

That is not very surprising – as the release was about a ‘special case’ scenario – but neglected to mention any specific ‘special case’, leaving it to the media to shout out a possible reason for this intervention: ‘SAUDI ARAMCO, THE WORLD’S LARGEST FLOTATION.’ 

My own contribution on that story is here on Forbes, and here on Board Talk. This is certainly a story that is going to inspire conversations about corporate governance, investor concerns – and maybe even where we stand in Britain on ‘national values’ after Brexit. It is important for multiple reasons- but here, because implementing Brexit is going to be a substantial drain on resources.

Where will a focus on Corporate Governance, which has climbed steadily since the financial crisis and focused up to a crescendo, look next amid such circumstances? And, should Saudi Aramco come to London, what will the ‘independent non-executive directors’ required by the FCA look like, exactly? Gender diversity?

One thing is clear: the man or woman on the street may well care about the implications of a listing for Saudi Aramco on their pension fund holdings. It’s all part of the rising tide of the importance of Environmental Social and Governance (ESG) issues – ones no boardroom, and regulation, should ever ignore.

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