Board Diversity Appointments — UK Listing Rule 9.8.6R(9) and Beyond

Board diversity in the UK is no longer a matter of good intentions. Listed companies must report against diversity targets set in the FCA’s listing rules, the FTSE Women Leaders Review and the Parker Review publish company-by-company progress every year, and the UK Corporate Governance Code expects the nomination committee to show how appointments and succession plans promote diversity. Investors and proxy advisers read those disclosures closely. For a chair or nomination committee, the practical question is not whether diversity matters but how to run an appointment process that produces a genuinely diverse field of strong candidates, and then chooses the best person from it.

This guide covers the rules and voluntary targets that apply in the UK, the nomination committee’s role, how to design a board search that widens the field without lowering the bar, how to avoid tokenism, how to assess cognitive and experiential diversity, what the Equality Act 2010 does and does not allow, and how board evaluation and succession planning keep progress from slipping. If you are planning an appointment now, our board of directors recruitment service is the place to start.

The UK framework at a glance

Four sources shape what UK boards are expected to do, and they differ in legal force.

• The FCA’s UK Listing Rules (UKLR). A binding disclosure obligation for in-scope listed companies, on a comply-or-explain basis against three numerical targets.
• The UK Corporate Governance Code 2024. Applies on a comply-or-explain basis to companies in the equity shares (commercial companies) listing category, and sets expectations for how the nomination committee runs appointments and succession.
• The FTSE Women Leaders Review and the Parker Review. Voluntary, business-led reviews with public targets and annual reporting. They carry no legal sanction, but their published data is widely used by investors.
• The Equality Act 2010. Sets the legal limits on what a company can do to change the make-up of its board, and is the reason targets must never become quotas.

For FCA-regulated financial services firms there was a fifth strand in prospect. In September 2023 the FCA (CP23/20) and the PRA (CP18/23) consulted on diversity and inclusion rules for regulated firms, including D&I strategies, data reporting and targets. In March 2025 both regulators said they would not take those proposals forward, citing consultation feedback, expected legislative developments and a wish to avoid extra burdens on firms. Regulated firms therefore face no FCA or PRA diversity targets of their own, although the regulators’ interest in culture and non-financial misconduct continues, and a regulated firm that is also listed is caught by the listing rules in the usual way.

The listing rule targets: what UKLR requires

The diversity disclosure was introduced in April 2022 as Listing Rule 9.8.6R(9) and applied to accounting periods starting on or after 1 April 2022. When the FCA replaced the old Listing Rules with the UK Listing Rules sourcebook in July 2024, the obligation was carried across. For companies in the equity shares (commercial companies) category it now sits at UKLR 6.6.6R(9), with the data tables prescribed in UKLR 6 Annex 1R. Issuers in other listing categories should check the equivalent provision in their own chapter. As the FCA set out when it finalised the rules, the three targets are:

• at least 40% of the board are women;
• at least one of the senior board positions (Chair, Chief Executive, Chief Financial Officer or Senior Independent Director) is held by a woman; and
• at least one member of the board is from a minority ethnic background, using the ONS categories and excluding white ethnic groups.

The company must state in its annual financial report whether it has met each target as at a chosen reference date in the accounting period. Where it has not, it must explain why. It must also publish standardised tables showing the sex or gender identity and ethnic background of the board and of executive management, and explain how the data was collected.

Two points matter for anyone planning a board appointment. First, these are disclosure targets, not quotas. Missing one is not a breach if the explanation is honest and specific. A vague or recycled explanation, however, invites investor challenge. Second, the reference date focuses attention on timing. If a long-serving non-executive is due to retire and the board is at exactly 40%, the order in which retirements and appointments happen will affect what the company reports.

FTSE Women Leaders Review and Parker Review targets

The listing rule targets did not appear from nowhere. They track the voluntary targets set by two long-running reviews, and most FTSE 350 boards report against both.

FTSE Women Leaders Review

The FTSE Women Leaders Review, which succeeded the Hampton-Alexander Review, asked FTSE 350 companies to reach at least 40% women on their boards and in their leadership teams (the executive committee and its direct reports) by the end of 2025, and to have at least one woman as Chair or Senior Independent Director and/or one woman as Chief Executive or Finance Director. Its scope was extended to the 50 largest private companies. The 2026 report, published in February 2026 and summarised by Freshfields, found women held 43% of FTSE 350 board seats and 36% of leadership roles. The gap is in the most senior positions: women held 17% of FTSE 350 chair roles, 8% of chief executive roles and 21% of finance director roles, against 61% of Senior Independent Director roles. In other words, boards have largely met the headline number by appointing women to non-executive seats. The harder work now is the executive pipeline and the chair.

Parker Review

The Parker Review set the target of at least one director from a minority ethnic background on every FTSE 100 board, later extended to the FTSE 250 by December 2024. It has since asked FTSE 350 companies to set their own targets for minority ethnic representation in senior management by December 2027, and has extended its board target to the 50 largest private companies for December 2027. According to the Parker Review’s March 2026 update, 98 FTSE 100 companies met the board target, and 89% of the FTSE 250 companies that responded met theirs. Of the companies that disclosed senior management targets, the average target was 15% in the FTSE 100 and 13% in the FTSE 250.

Both reviews point the same way: board numbers are improving and attention is moving to the executive layer. A board that recruits only from serving FTSE chief executives and finance directors is drawing on a pool that is itself still unbalanced.

The nomination committee and Principle J

Under the UK Corporate Governance Code 2024, which applies to financial years beginning on or after 1 January 2025, Principle J says appointments to the board should follow a formal, rigorous and transparent procedure, and that an effective succession plan should be maintained for the board and senior management. Both appointments and succession plans should be based on merit and objective criteria and should promote diversity, inclusion and equal opportunity. The 2024 revision removed the previous list of named characteristics, which leaves boards free to define diversity broadly, and Provision 23 now asks the annual report to describe the diversity and inclusion policy, its objectives, how it links to strategy, progress made, and any initiatives under way.

In practice, the nomination committee owns four things:

• A skills and experience matrix mapped against the strategy for the next three to five years, not the last three.
• A rolling succession timetable showing when each director reaches six and nine years of service, so that appointments can be planned rather than forced.
• The search process itself, including the choice of search firm, the brief, the longlist standard and the interview panel.
• The disclosure of what it did and why.

The quality of the committee chair matters a great deal here. A chair who is prepared to send a brief back, challenge a narrow longlist and ask why a candidate was ruled out is the single biggest factor in whether a process produces a different outcome. If the committee itself needs strengthening, see our nomination committee chair recruitment service. For the wider question of how skills, independence and diversity fit together across the whole board, our board construction guide sets out the method.

Running a search that produces a diverse longlist without lowering the bar

The most common failure in board diversity is not at the longlist stage but between the longlist and the appointment. A search firm presents a varied list, and then the brief’s unstated requirements (a particular sector, a particular kind of employer, prior plc board experience, a specific job title) filter it back to the same profile the board would have appointed anyway. Fixing that is mostly about the brief, not the sourcing.

Write the brief around capabilities, not CVs

Start from what the board needs the new director to do. “Has been a FTSE 250 CFO” is a proxy. “Can lead the audit committee through a change of auditor and a first year of reporting under new internal controls requirements” is a capability, and it can be evidenced by people from audit partnerships, divisional finance roles in larger groups, private equity portfolio companies or the public sector. Test every requirement: is it genuinely needed, or a habit? Prior listed-board experience is a common example: valuable for a chair, often an unnecessary filter for a first-time non-executive.

Widen where you look

A broad longlist depends on looking beyond the people already sitting on boards. That means executives one level below the C-suite in large organisations, partners in professional firms, senior leaders in the public and not-for-profit sectors, founders and operators from private and venture-backed companies, and people with relevant international careers. Good NED recruitment treats these as primary sources, not a top-up once the usual names have been approached. Agree with the search firm at the outset what a good longlist looks like, how many candidates from outside the traditional pool you expect to see, and how the firm will report on who was approached and why people dropped out.

Keep the assessment structured

Unstructured conversations favour candidates who resemble the people interviewing them. A structured process does not. Agree the criteria and how each will be scored before anyone meets a candidate, ask every candidate the same core questions, use a panel that includes more than one perspective, and record the reasons for each decision. It also shows the appointment was made on merit against objective criteria.

Track the funnel

Ask for simple data at each stage: longlist, shortlist, final interviews, appointment. If the longlist is balanced and the shortlist is not, something in the brief or the assessment is doing the filtering. That information is far more useful to a nomination committee than a statement that the search firm “is committed to diversity”.

Avoiding tokenism

Tokenism happens when a director is appointed mainly so the board can report a number, and is then not expected or allowed to influence decisions. It damages the individual, the board and the company’s credibility. Typical signs are a director with no clear committee role, a rushed late appointment to meet a reporting date, or challenges in the boardroom that are noted and ignored.

The protections are straightforward:

• Appoint for a defined contribution. Every director should know which skills gap they fill and which committees they sit on. If you cannot describe that, the appointment is not ready.
• Avoid the single appointment. Experience suggests that one person who differs from the rest of the board is more likely to be isolated than two or three. Plan for more than one appointment over the succession cycle.
• Induct properly. A first-time non-executive from outside the plc world needs a thorough induction on the business, the regulatory position and how the board works.
• Look at the chair’s conduct. Whether new voices are heard depends heavily on how the chair runs the meeting. Board evaluation should test this directly.

Assessing cognitive and experiential diversity

The listing rule targets measure sex and ethnicity because they can be measured consistently. The reason boards benefit from diversity, though, is that people with different backgrounds and careers tend to see risks and opportunities differently. Cognitive and experiential diversity is harder to measure but just as important to plan for.

Useful dimensions to map include:

• Functional background: finance, operations, technology, sales and marketing, legal and regulatory, people.
• Sector and ownership context: listed, private equity-backed, family-owned, public sector, not-for-profit.
• Stage of business: start-up and scale-up, mature growth, turnaround and restructuring.
• Geography: markets where the company sells, sources or plans to expand.
• Customer and employee perspective: understanding of the people who buy from and work for the business, which may include socio-economic background, age and lived experience.

At interview, test how a candidate thinks rather than where they have been. Case-style questions work well: give the candidate a real dilemma the board has faced (anonymised if needed) and ask how they would approach it, what information they would want and where they would push back on management. Our listed company board construction guide covers how to turn this kind of mapping into a skills matrix that stands up to investor scrutiny.

The legal limits: positive action, not positive discrimination

The Equality Act 2010 allows employers to take positive action to address under-representation, but it does not allow positive discrimination. The distinction applies to board appointments as much as to any other role. The government’s positive action guidance for employers sets out the position.

What is allowed. Under section 158, an employer that reasonably thinks people with a protected characteristic are under-represented or disadvantaged can take proportionate steps to encourage and enable them: advertising where those candidates will see it, stating that applications from them are welcome, outreach, mentoring and development programmes. In a board search, this covers deliberately widening the sourcing, briefing the search firm to approach under-represented groups, and supporting first-time candidates through the process. Under section 159, where two candidates are as qualified as each other for the role, the employer may treat the one from the under-represented group more favourably, provided the action is proportionate. This is the tie-breaker, and it applies only at the point of genuinely equal merit.

What is not allowed. Appointing a less suitable candidate because of a protected characteristic, operating a quota regardless of merit, routinely favouring a characteristic, or setting a low pass mark so that clearly different candidates can be treated as equal. The government guidance cites the employment tribunal case of Furlong v Chief Constable of Cheshire Police, where treating everyone who passed a threshold as equally qualified and then preferring under-represented candidates was found to be unlawful.

The practical rule for a nomination committee is simple. Put the effort into the front end of the process, where positive action is broad and lawful, and make the final decision on merit against criteria agreed in advance. If the committee is relying on the tie-breaker, it should be able to show that it assessed the candidates against the same criteria and found them equally qualified. Targets are a lawful statement of ambition; treating them as a quota for a particular appointment is not.

Board evaluation and succession planning

Diversity on a board is not fixed once an appointment is made. Retirements and resignations move the numbers, and two departures can undo three years of progress. The tools that keep it on track are the annual board evaluation and a succession plan that the committee actually uses.

The Code expects an annual performance review of the board, its committees, the chair and individual directors, with FTSE 350 companies having an externally facilitated review at least every three years. A good review does more than ask whether directors are satisfied. It looks at whether different views are heard and acted on, whether the board’s skills still match the strategy, and how the board’s composition is expected to change over the next three years. Our guide to running a board effectiveness review cover the process in more detail.

Succession planning then translates the evaluation into a timetable. Keep a forward view of when each director reaches six and nine years, which roles (chair, committee chairs, SID) will need filling, and which skills will be lost. Overlap appointments with departures where possible. For the chair in particular, start early. With women holding a small minority of FTSE 350 chair roles, a board that wants a wider field for its next chair appointment needs to begin identifying and developing candidates, including from among its own non-executives, well before the incumbent steps down.

Finally, look below the board. The FTSE Women Leaders Review and Parker Review data both show the executive pipeline lagging the board. Executive directors and future non-executives come from senior management, so succession planning for the executive committee and its direct reports is as much a part of board diversity as the next NED search.

How Exec Capital approaches board appointments

Our board work starts with the brief. We work with the chair and nomination committee to separate the capabilities the board needs from assumptions that narrow a search, and agree up front what a good longlist looks like. We source well beyond serving plc directors, drawing on the group’s network of senior finance, operational and governance leaders across listed, private equity-backed, owner-managed and regulated businesses. We report candidly on who we approached, who progressed and why, giving the committee evidence for its decisions and its annual report. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate. To discuss an upcoming appointment, see our board recruitment service or tell us about your hire.

Frequently asked questions

Are the FCA board diversity targets mandatory?

The disclosure is mandatory for in-scope listed companies; meeting the targets is not. The company must say whether it has met each of the three targets and, if not, explain why. It must also publish the standardised data tables on its board and executive management.

Where is the diversity rule now that the old Listing Rules have gone?

The former LR 9.8.6R(9) was carried into the UK Listing Rules in July 2024. For commercial companies it is UKLR 6.6.6R(9), with the data tables in UKLR 6 Annex 1R. Other listing categories have their own equivalent provisions.

Do FCA-regulated firms have separate diversity targets?

No. The FCA and PRA consulted on diversity and inclusion rules for regulated firms in 2023 but announced in March 2025 that they would not proceed. A regulated firm that is listed is still subject to the listing rule disclosure.

Can we only consider women or minority ethnic candidates for a board seat?

Not lawfully, in most circumstances. You can widen sourcing and encourage applications from under-represented groups, but the appointment must be made on merit. The section 159 tie-breaker applies only where candidates are genuinely as qualified as each other.

How early should a board start a diversity-focused succession plan?

Ideally two to three years ahead of known departures, and longer for the chair. That leaves time to find candidates outside the usual pool and develop internal successors.