Investors step up pressure to increase ethnic diversity on boards

  • Investors set out expectations on companies ahead of AGM season
  • New ‘Amber-tops’ to be issued for ethnic diversity and climate change
  • Companies cautioned on executive pay and pensions in light of the pandemic

Investment managers will be turning up the pressure on companies to improve ethnic diversity on their boards in this year’s AGM season, as the Investment Association (IA) today outlines its expectations of companies on issues including climate change, diversity, and executive pay.

This year, IVIS, the IA’s Institutional Voting Information Service, for the first time, will issue an ‘amber-top’ to FTSE 350 companies that do not disclose either the ethnic diversity of their board, or a credible action plan to achieve the Parker Review targets of having at least one director from an ethnic minority background by 2021. Investors are also seeking greater progress on gender diversity, with companies whose board comprise of 30% or less female directors receiving a ‘red-top’ – an increase on last year’s 20% threshold.

Climate change is another issue topping investors’ concerns, with the AGM season giving investment managers the opportunity to hold companies to account and ensure they are considering the impact of climate change on the long-term value of their businesses.

This year, companies in high-risk sectors (sectors identified by the TCFD as ‘potentially most affected by climate change’), which do not address all four pillars of Task Force for Climate-related Financial Disclosures (TCFD) will, for the first time, receive an ‘amber-top’. Investment managers want to see companies reporting on climate-related risks in a consistent, clear and comparable manner, enabling managers to make better informed investment decisions – ultimately to the benefit of savers and investors.

Andrew Ninian, Director for Stewardship and Corporate Governance at the Investment Association, said:

“The UK’s boardrooms need to reflect the diversity of modern-day Britain. With three-quarters of FTSE 100 companies failing to report the ethnic make-up of their boards in last year’s AGM season, investors are now calling on companies to take decisive action to meet the Parker Review targets. Those who fail to do so this year will find themselves increasingly under investors’ spotlight.”

Commenting on climate change, he added:

“The UK is now at critical juncture as we look to reach net zero by 2050. As stewards of the economy, investment managers have an important role to play in supporting companies transition to a more sustainable future. Having clear and consistent data on the climate-related risks faced by companies is vital to achieve this, and investors will now be placing additional pressure on those that fail to provide this information.”

Investors will also continue to shine a spotlight on executive pay, having already cautioned companies to treat their executives in line with the rest of the workforce and remain mindful of the pandemic’s impact on society. Investors have warned remuneration committees not to compensate executives for reduced pay as a result of the pandemic by adjusting this year’s remuneration, whether through ‘catch up’ awards or disproportionate salary increases. Investors also do not generally expect bonuses to be paid if a company has taken government or shareholder support – any company that choses to do so is expected to provide a clear rationale.

Notes to Editors 


  • IVIS is the IA’s paid-for service that provides independent information on listed companies in the FTSE All-Share and FTSE Fledgling Index, to help shareholders reach a decision on how to vote at AGMs.
  • IVIS does not recommend investors how to vote. Instead, using the IA’s guidelines as the basis for its analysis, each IVIS report is colour coded from a ‘blue top’, ‘amber top’ to a ‘red top’, to reflect any breaches of best practice or highlight areas of concern.
  • Red denotes the strongest concern, followed by amber, which shows a significant issue to be considered. A 'blue top' indicates no areas of major concern.

Climate Change

  • IVIS will use the sectors identified by the TCFD as the “potentially most affected by climate change”. This includes: financials, energy, transportation, materials and buildings, agriculture, food, and forest products.
  • The four pillars of TCFD include: governance, risk management, strategy, metrics and targets.

For further information, please contact:

Katie Martin, Head of Communications: [email protected]

T: +44 (0)20 7269 4655

Helen Ayres, Communications Manager: [email protected] 

T: +44 (0)20 7269 4620

David Parton, Communications Executive: [email protected]

T: +44 (0)20 7269 4625

IA press office: [email protected]

T: 020 7269 4696

About the Investment Association (IA):

  • The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £8.5 trillion of assets and the investment management industry supports 113,000 jobs across the UK.
  • Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
  • Our purpose is to ensure investment managers are in the best possible position to:
    • Build people’s resilience to financial adversity
    • Help people achieve their financial aspirations
    • Enable people to maintain a decent standard of living as they grow older
    • Contribute to economic growth through the efficient allocation of capital.
  • The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
  • The UK is the second largest investment management centre in the world, after the US and manages over a third (37%) of all assets managed in Europe.