Investor group warns almost 100 firms over lack of gender diversity

Lloyds Banking Group, Foxtons and Paddy Power are among almost 100 firms that have been singled out this year by an influential investor group for failing to boost the number of women on their boards.

According to documents seen by the Guardian, the Investment Association (IA), which represents City firms with £7.7tn in assets under management, has shamed 94 listed companies for dragging their heels on gender diversity. It has stamped their annual reports with the highest warning label.

The list, which was confirmed by the Investment Association, shows the group has so far identified 57 of the UK’s 350 largest listed companies, 11 of which are on the FTSE 100, before their respective annual general meetings as falling foul of targets that aim to push the proportion of women in top leadership roles above 25%. The list is expected to grow as the AGM season rumbles on.

The move comes as boards have also been targeted by unions and shareholder action groups for excessive executive pay.

The GMB union has urged shareholders to block a 44% pay rise for Iain Conn, the boss of Centrica, which owns of British Gas, at the firm’s AGM on Monday.

The union said thousands of British Gas workers had recently voted to accept cuts to their pensions to support the company’s return to competitiveness.

The Investment Association’s Institutional Voter Information Service has given the highest warning, or “red top” to 20 firms for being led by all-male boards or having “one and done” boards that feature a sole female director.

Although IVIS does not issue recommendations in the same way shareholder advisory services such as Glass Lewis and ISS, a lack of board diversity has been noted against the election of each company’s nomination committee chairs.

A further 74 firms have been issued with an “amber top” warning if women account for less than 25% of the board. This much larger cohort includes mining firm Glencore, Metro Bank, Centrica and Ocado.

Andrew Ninian, the IA’s director of stewardship and corporate governance said the trade body will continue to highlight companies who fall short on diversity.

“Evidence clearly shows that more diverse boardrooms make better decisions. Investors want to see greater diversity in the companies they invest in to ensure our savers and investors are getting the best returns possible,” he said.

“Companies need to set out how they are going to improve their gender diversity or face revolts from investors who want to see a more diverse group of people around the boardroom table,” he added.

Some companies say they’re making efforts to address the issue. Foxtons said it has made “promising progress” over the past 12 months, having hired a woman to lead the HR department and appointing a women in a senior director role to oversee its gender parity initiatives.

The company said its next step is to monitor its leadership pipeline for gender balance, while matching its top female talent “with the best opportunities”.

Millennium & Copthorne Hotels, meanwhile, said it has added a second woman to its board since the IVIS report was released.

Centrica has three women on its board but will lose one when the head of its audit committee steps down after an eight-year stint in the role. The chair, Charles Berry, is expected to tell shareholders at the AGM that the drop in diversity shouldn’t be taken as a sign that the issue has “become less important” to the board. He will stress that diversity will be at front of mind for the team.

The Investment Association’s IVIS reports have given “red” tops to:

St. James’s Place Plc

Alliance Trust Plc

Tritax Big Box Reit Plc

Capital & Counties Properties

Grafton Group Plc

Witan Investment Trust Plc

Millennium & Copthorne Hotels

Domino’s Pizza

Computacenter Plc

Hill & Smith Holdings Plc

JPMorgan American Investment Trust Plc

Herald Investment Trust Plc

Hilton Food Group Plc

Clarkson Plc

Hg Capital Trust Plc

Sig Plc

Restaurant Group Plc

Charter Court Financial Services Group

Nb Global Floating Rate Income Fund Limited

888 Holdings Plc

•This article was amended on on 23 May 2019 to clarify that the Investment Association reports have already been issued