Trans women excluded from female diversity targets after city backlash
The city regulator was forced to exclude trans women from new female diversity targets after backlash from industry chiefs.
The Financial Conduct Authority said it would drop plans to require listed companies to include those who identify as women when counting female employees.
The decision comes after hundreds of businesses in the city said they disagreed that goals should be based on gender identity rather than sex.
Of 439 responses to the consultation, all but one respondent said they did not want trans women included in targets and data disclosures regarding female representation.
The companies said such an approach would not comply with equality legislation, fail to recognize the gender-based under-representation of women and the structural discrimination they may face and could allow men to “play” with the system of objectives.
Instead, some companies wanted trans people to be identified separately because of their different life experiences.
The move came as the watchdog set new requirements for UK-listed companies to ensure that 40% of its board are women and that at least one senior board member directors – chairman, chief executive, chief financial officer or senior independent director – or a woman.
Companies will also be required to disclose diversity information in their annual reports as part of a new “comply or explain” statement.
The regulators’ move represents the latest attempt to boost diversity in the financial services industry, which has historically been dominated by men.
Most companies in the city already have targets to boost ethnic and gender diversity, but the proposals will mean most FTSE 350 companies will need to add more women to their boards in coming years. Currently, only 34% of board members of FTSE 350 companies are women.
The regulator also said it would require boards to have at least one member from an ethnic minority, adding that it had removed the term “non-white” from its proposals because it is offensive.
Sarah Pritchard, Head of Markets at FCA, said: “As investors pay increasing attention to diversity at the top of the companies they invest in, improving transparency at the board and management level will help hold companies to account and drive progress.”
For digital gender disclosures, the FCA said companies can report on the basis of sex or gender identity.
It will review the rules within three years to assess whether the nature and level of the targets “remain appropriate and sufficiently ambitious”.
Regarding its own diversity targets, the FCA said it reports on a “self-identifying basis” and will continue to do so in the future.
The new rules will come into effect from the accounting year beginning April 1, 2022, which means that the new information will start to appear in the annual financial reports published from mid-2023.