Diversity & Inclusion Are companies achieving the targets in the new Listing Rule?

In 2022, the FCA introduced a new Listing Rule for premium and standard listed companies to provide disclosures on board and executive management diversity, reflecting the drive for transparency around social issues. The disclosures were mandatory for December reporters for the first time in 2023. Our survey looks at how the first 30 FTSE 350 December 2023 reporters have met the new Listing Rule requirements, and whether their annual reports reflect the transparency and progress that society and regulators are looking for around board diversity, executive management diversity and how diversity and inclusion are integrated within the business. Read the full report

Key takeaways

67% of companies had met or exceeded the target of 40% of the board being women; 90% had at least one minority ethnic director on the board.

70% of companies had a woman in one of the four senior board positions – unchanged from 2022.

Only 73% of companies met the Listing Rule requirement to explain how the diversity data had been gathered.

77% of boards discuss the importance for their business of achieving a diverse board – but 87% explained why workforce diversity and inclusion was important to the business.

Actions to take:

Assess whether the annual report explains in a clear and consistent way why diversity and inclusion at workforce, executive management, and board level is important to the business.

Evaluate the board’s existing approach for building diversity and inclusion into succession planning and board performance reviews and consider how to report transparently in this area.

Ensure that all elements of the FCA Listing Rule are included and clearly identifiable:

a statement setting out that each of the targets in the Rule have been achieved or a plan to achieve them

both mandated tables on sex or gender identity and ethnicity

an explanation of how data has been gathered for the board and executive management

Climate Transition Plan Disclosures Now and future

With climate change at the top of global priorities, investors and regulators are calling for greater transparency on companies’ progress and performance against their climate-related commitments and their readiness for climate transition. With the FCA already encouraging listed companies to consider the UK’s Transition Plan Taskforce (TPT) disclosure framework and the ISSB’s announcement that it is assuming responsibility for the TPT disclosure framework and related guidance, the focus on high quality transition plan disclosures is likely to remain. Now in its second year, our survey of annual reports looks at the first 50 annual reports issued by FTSE 100 reporters in 2024 and considers how reporting of their transition plans compares to the TCFD recommended disclosures and expected future requirements under UK-endorsed ISSB standards and the TPT disclosure framework. Read the full report

Key takeaways

All companies disclosed one or more climate-related target (up from 98% in 2022) and all indicated the timeframe over which the targets apply (up from 92% in 2022)

60% of companies included information about their plans to transition to a low carbon economy, 34% included ‘some but limited’ information and 6% provided no disclosures (broadly comparable with 2022)

34% of companies provided a cross-reference from their Annual Report to a standalone report described as a transition plan (up from 20% in 2022), with a further 10% stating that one was in development, to be published in 2024 or 2025

22% of companies stated that they had considered the TPT Disclosure Framework when preparing their 2023 disclosures and an additional 18% stated that they intend to produce TPT aligned disclosures going forward (up significantly from 6% and 12% in 2022)

58% clearly identified the board, board member or a board-level committee with oversight and accountability responsibilities for the transition plan (up significantly from 25% in 2022)

86% of companies disclosed long term climate-related targets of 2040 and beyond, with 26% also disclosing interim targets beyond 2030 (up from 80% and 10% in 2022)

Actions to take:

Establish clear lines of responsibility and reporting for the development, implementation, and monitoring of a transition plan

Evaluate existing commitments and transition plans to ensure interim targets are set at appropriate intervals across the full target horizon and clear actions are developed and agreed on how to achieve climate-related targets

Get ready for evolving transition plan disclosure requirements:

Assess existing disclosures to ensure information is consistent with the TCFD recommended disclosures on transition plans

Evaluate the ISSB’s Climate Standard (IFRS S2) and the TPT Disclosure Framework to identify any gaps with future requirements and opportunities to enhance current disclosures

Provide clear signposting and cross-referencing to transition plan disclosures

Use clearly defined and consistent terminology to describe transition plan information