Read: Firms put on notice by investors over climate and diversity
FTSE 350 companies that are not doing enough to improve diversity on their boards could face a shareholder revolt at their annual meetings this year.
The Investment Association, which runs IVIS, a paid-for information service on listed companies, said that for this year’s AGM season it would issue an “amber-top” tag for companies that do not disclose the ethnic diversity of their board, or do not have a credible action plan to achieve targets of having at least one director from an ethnic minority background by 2021.
The target is in line with the Parker review into diversity on boards commissioned by the government.
IVIS does not recommend how fund managers should vote, but an “amber-top” or “red-top” recommendation reflects a breach of best practice or area of concern that could result in an abstention or vote against the resolution.