New FCA targets to improve gender and ethnic diversity on the boards of listed companies is a welcome step. However, underrepresentation of those from other diversity strands, such as disability, sexual orientation and lower socio-economic backgrounds also needs to be considered, says specialist employment lawyers, GQ|Littler.

Under the new proposals, listed companies would be required to disclose whether they have reached certain diversity targets and if not, why not.

These targets include:

• Women (including those self-identifying as women) should make up 40% of the board

• At least one of the senior board positions (Chair, Chief Executive Officer, Chief Financial Officer or Senior Independent Director) should be a woman

• At least one board member should be from a non-white ethnic minority background

GQ|Littler says firms must be careful to tread the fine line between positive action and positive discrimination in trying to meet these targets. For example, ensuring if a diverse candidate for a role is selected over a non-diverse candidate, that they are as qualified as the other person and that this is a proportionate step to take to address diversity. Positive action that firms may take include offering training to certain under-represented groups.

Sophie Vanhegan, Partner at GQ|Littler, notes: “These proposals are undoubtedly a step in the right direction; we would hope to see further action taken to improve diversity in other areas, such as sexual orientation and socio-economic background as a next step.

“Gender diversity has been a major area of focus for financial services firms in recent years, and while great progress has clearly been made, the FCA rightly recognises that there is still more to do, particularly in terms of getting women into the most influential board positions.”