Legal Feminist has responded both to the FCA consultation on diversity & inclusion in listed company boardrooms and to a joint Discussion Paper of the Bank of England, the Prudential Regulatory Authority and the FCA on diversity in the financial services sector. In both cases, while we applaud the intention behind the proposals, and are strong proponents of data-driven policy-making, we felt that the way in which those intentions were to be reflected in rules and policy rendered the proposals at best ineffective and at worst dangerous.
Remarkably, the FCA’s proposals on “gender” reporting failed to disclose relevant conflicts of interest (Stonewall) and made no reference to existing legislation that already requires many listed companies to report their board composition by sex (take a bow, drafters of section 414C(8) Companies Act 2006).
PDFs of our responses can be found at the end of this blog. Below is the Introduction and Executive Summary of our response to the FCA consultation.
Legal Feminist is a collective of practising solicitors and barristers who are interested in feminist analysis of law, and legal analysis of feminism. Between us we have a wide range of specialist areas of law including company law, corporate finance, financial services, employment, data protection and privacy, discrimination and human rights law. Our range of specialisms enables us to consider holistically the issues raised in the Consultation Paper (CP) and our collective experience enables us to comment on the practical implications of some of those issues. As a non-aligned collective of lawyers from a range of backgrounds, we do not represent any particular firm or issuer and are therefore well-placed to give candid feedback on the issues raised by the CP.
We responded to Discussion Paper 21/2 published by the Prudential Regulatory Authority, the Bank of England and the Financial Conduct Authority (FCA). To the extent the DP and CP raise common issues, we may address those issues in the same terms.
As feminists, we generally welcome initiatives aimed at promoting diversity and inclusion (D&I) and we thank the FCA for its efforts to drive forward D&I initiatives. We particularly support proposals that seek to gather data to support policy making, provided this is done carefully. However, we recognise that such initiatives engage a range of legal issues and therefore need to be carefully considered by specialists to avoid unintended harm.
As the FCA has no direct responsibility for D&I matters, we are concerned that it does not have access to the particular expertise in international employment, data protection and privacy or human rights law required for a full consideration of the issues raised by the CP. Regretfully, we have formed the view that the proposals outlined in the CP are flawed, perhaps fatally, in view of the difficulty of reconciling them with other laws and regulations in these specialist areas.
Past practice in relation to regulatory intervention in matters of Environmental, Social and Governance has tended towards entrenching rules or policies developed by groups with relevant expertise – for example in relation to the codification in the Listing Rules of recommendations of the Task Force on Climate-related Financial Disclosures. We recommend that the FCA consider appointing a working group, comprising stakeholders with a range of expertise and interests, to consider its proposals further. Members of the Legal Feminist collective would be glad to serve on such a working party.
A number of our concerns are relevant to more than one consultation question. Accordingly, we have framed our response as a general discussion of some of these issues, to which we then refer in answers to the specific consultation questions. We have also included an Executive Summary.
The potential consequences of the proposals in the CP include:
- confusing disclosures in annual reports as a result of the FCA’s failure to take account of the existing mandatory disclosure regime in the Companies Act 2006
- poor response rate and/or non-standardised disclosures as a result of incompatibility of data collection and reporting with data protection rules of the UK and other jurisdictions
- individuals with certain protected characteristics being easily identified, giving rise to issues of privacy and even personal safety
- poor quality disclosures as a result of failure to take account of different ethnicity considerations applicable to global and overseas Issuers
- poor quality data resulting from failure to collect data on sex on a disaggregated basis
- difficulty of comparing data to other data sources, such as the UK Census, resulting from self-identification of gender (Self ID)
- Issuers being exposed to possible discrimination claims from employees as a result of seeking to comply with rules based on Self ID
- breach of the FCA’s Public Sector Equality Duty set out in the Equality Act 2010 (EqA) through the adoption of Self ID, which is not recognised by the EqA
For the full text of Legal Feminist’s responses to the consultation paper and the discussion paper, download the PDFs below.