Legal & General warn FTSE 100 companies against all-white boards

Legal & General warn FTSE 100 companies against all-white boards

The UK’s biggest fund manager, Legal & General Investment Management (LGIM), has warned FTSE 100 companies with an all-white board that they will be voted against if they do not have a Black, Asian or minority ethnic (BAME) board director by 2022. In such circumstances, LGIM will vote against the re-election of their chairman or the head of their nomination committee and have commented that ‘For companies that fail to meet our transparent and rules-based minimum expectations, there will be voting and investment consequences.’ The fund manager has also written to the bosses of S&P 500 companies in the US expressing the same expectation by January 2022.

In an effort to encourage ethnically diverse boards, LGIM released an Investment Stewardship Diversity Plan 2020 in September, where it had initially expressed its intentions. In this plan, LGIM disclosed that it had responded to the 2020 Parker Review, which set a recommended target for all FTSE 100 companies to have at least one director of colour by 2021 and by 2024 for the FTSE 250. In addition, the fund manager acknowledged that investors have a responsibility ‘to demand more transparent disclosure on ethnic diversity, require explicit policies on ethnic diversity and inclusion, and hold companies accountable for these policies’. In doing so, LGIM further expressed support for the UK’s Financial Reporting Council’s expectation of improved reporting on ethnic diversity

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