The regulator announced its intention to formalise inclusive targets in March last year while admitting it also had a lot of work to do to boost diversity.
The rules will apply to listed companies for financial accounting periods starting from 1 April 2022, and are to be reviewed in three years to check if those targets are still appropriate.
The FCA has called for firms to either “comply or explain” to targets requiring at least 40 per cent of the board to be women, including those who self-identify as women and to have at least one female senior board member. These will include positions such as chair, chief executive, senior independent director, or chief financial officer.
At least one member of a firm’s board must also be from an ethnic minority background.
Companies must disclose this information in their financial results alongside a numerical table detailing the diversity of their board.
If companies cannot meet these targets, they are required to explain why not. It is not clear what, or if a penalty for companies not explaining themselves is at this stage in the process, but the FCA has previously mentioned “supervisory tools we can draw on”.
Sarah Pritchard, executive director of markets at FCA, said: “As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress.”