The Parker Review 10 Years On: Improving Ethnic Representation of UK Business

In March 2025, the Parker Review Committee (“Committee”) published its annual update report on ‘Improving the Ethnic Diversity of UK Business‘ (the “Report”) marking the Parker Review’s 10-year anniversary. This milestone update revisits the progress made over the last decade and emphasises the critical role of diverse leadership in fostering innovation and driving sustainable growth. 

Since the Committee’s first consultation on the ethnic diversity of UK Boards in 2015, it has advocated for FTSE 350 companies to set voluntary targets in order to achieve greater representation of ethnic minorities on boards. In 2017, the Committee introduced a target for FTSE 100 companies of at least one ethnic minority director on the board (the “Target”) to be achieved by December 2021 (the “One by 2021 Target”). It also set the same Target for FTSE 250 companies, but with a longer lead time of December 2024 (the “One by 2024 Target”). Then in its 2023 annual report, the Committee announced two more targets: for the UK’s top 50 largest private companies to achieve one ethnic minority director on the board by December 2027 and for all FTSE 350 companies to set a target for the ethnic diversity of the senior management team to be achieved by the end of 2027 (with the proposed target to be set out by December 2024.) 

The March Report states that as of the end of 2024: 

• 95% of FTSE 100 companies met the Target, with over 50% having more than one ethnic minority director;
   
• 86% of FTSE 250 companies that submitted a response (236 companies) met the One by 2024 Target; and
   
• 48% of the Top 50 private companies had met the Target, with progress continuing to be made towards the December 2027 target deadline.

The challenges FTSE 250 companies have faced

Despite a four-fold increase from 22% in 2019 to 86% by the end of 2024, some FTSE 250 companies failed to meet the One by 2024 Target. This March Report was, however, the first since the December 2024 deadline. As a result, the Committee closely scrutinised the data provided and identified several key factors why FTSE 250 companies face greater challenges in meeting the Target compared to their FTSE 100 counterparts: 

• Smaller boards: Statistically, FTSE 250 companies tend to have smaller boards than FTSE 100 companies. This results in fewer available positions and slower board turnover, reducing the opportunity to appoint ethnically diverse candidates.
   
• Less international focus: FTSE 250 companies are generally more UK-focused, unlike the more multi-national FTSE 100 companies. Consequently, FTSE 250 companies are less likely to possess the global geographical footprint or operational demands that promote greater ethnic diversity on their boards.
   
• Heightened cost-consciousness: FTSE 250 companies typically adopt a more cost-sensitive approach to limit wage growth and other expenses. As a result, they generally prefer to achieve gender and ethnic diversity targets through organic board rotation rather than by appointing additional directors. 

Practical Recommendations

The Report outlines key steps to help companies build a sustainable talent pipeline for leadership diversity in long run: 

• Setting publicly committed, purposeful and transparent targets: Clear and measurable goals foster accountability and build trust in leadership, going beyond mere avoidance of reputational risks or investor pressure;
   
• Develop internal leadership pipelines: Sponsorships, mentorship programmes, and structured development initiatives can help prepare individuals for senior leadership roles;
   
• Enhance recruitment practices: Strategies like bias-free job descriptions, shortlist diverse candidates, transparent progression pathways, and internal mobility opportunities can attract and retain talent from varied backgrounds. 

The Report also reminds companies to comply with strict regulations under the Data Protection Act when collecting and processing ethnicity data during recruitment processes. 

Companies also need to be mindful of legal considerations when considering and implementing positive actions. Positive actions addressing disadvantages or underrepresentation must be proportionate and targeted to the inadequacies in question, in compliance with the Equality Act 2010. Blanket preferential treatment or hiring decisions based solely on targets, rather than merit, risk being classified as unlawful positive discrimination.[1]

What’s Next?

Now most FTSE350 companies meet the Target, the Committee is now advocating for greater diversity on large private company boards and stronger ethnic representation in FTSE350 senior management. 

By the end of 2024, around 60% of the FTSE 100 companies had set a target for senior management diversity, with an average target of achieving 15% ethnic minority representation. 

[1] See: Furlong v Chief Constable of Cheshire Police Case No. 2405577/18. The Employment Tribunal held that an employment policy prioritising ethnic minority candidates who passed the recruitment tests (regardless of score) over other candidates with no protected characteristics, amounted to positive discrimination on grounds of sex, race and sexual orientation against the Claimant, and was unlawful. The full judgment is available here.