You must put more women in the board room, Davies warns UK plc

Britain's top companies have been given four years to effect "radical change" and double the number of women on their boards.

A government-commissioned report by Lord Mervyn Davies said FTSE-100 companies should aim to have a minimum of 25 per cent women on their boards by 2015, but stopped short of calling for enforceable quotas at this stage.

The former trade minister said all heads of boards should announce their goals for boosting female board representation within the next six months and stick to them, or explain why they had not done so.

Davies said reform was needed not just to promote equal opportunities, but to improve business performance.

"There is growing evidence to show that diverse boards are better, delivering financial out-performance and stock market growth," he said.

The report recommends that all heads of FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015, and listed companies should regularly disclose the proportion of women on the board, in senior executive positions, and in the organisation as a whole.

Davies said he believed voluntary targets would be successful but if these were not achieved, enforceable quotas might have to be considered.

"If we don't get success then obviously people reserve the right to set quotas," he said.

His report also recommends that headhunting firms draw up a voluntary code of practice encouraging gender diversity in board level appointment.

Women currently make up 46 per cent of Britain's economically active population but just 12.5 per cent of FTSE-100 boards. Half of companies in the FTSE-250 have no women directors.

The report drew support from the CBI for steering clear of quotas, but the business group said companies should set their own targets.

CBI president Helen Alexander said the lack of women at board level needed addressing "urgently", but a government-set target for FTSE 100 directors "would not reflect the different circumstances of individual companies". "We believe firms should report against internally-set targets that reflect the nature of particular sectors and the size and structure of the board," she said.

Miles Templeman, director-general of the Institute of Directors, said quotas were "incompatible with a meritocratic approach", and it was "unhelpful" that Davies had not ruled them out "once and for all".

There is evidence that companies have already been taking action to recruit female directors.

A study by headhunting firm Egon Zehnder International, also published yesterday, found that one in three board appointments to FTSE 100 companies so far in 2011 have been women.