Exclusive: Charlotte Valeur says she will call for new laws if FTSE 350 firms don’t improve diversity

This article is more than 1 year old

This article is more than 1 year old

The new chair of one of the UK’s most influential business groups has accused Britain’s biggest companies of lying when they say they cannot find enough female or ethnic minority directors.

Charlotte Valeur, who joined the Institute of Directors (IoD) in September, said she would start calling for new laws next year to force firms to improve their diversity if FTSE 350 companies failed to make faster progress.

Speaking to the Guardian ahead of International Women’s Day, Valeur criticised large listed companies for not achieving diversity targets. She said: “Do we really think that’s difficult? It’s a lie. It’s not difficult.

“I will be very unpopular with FTSE 100 [companies], but I don’t actually mind, because it’s not true that it’s difficult.”

The percentage of women on FTSE 250 boards increased only marginally, from 22.8% to 23.7%, in the year to June 2018. Over the same period, the number of female directors in FTSE 100 companies rose from 27.7% to 29%, according to a report by Cranfield University.

The percentage of female executive directors of FTSE 250 companies – who work full time for a company, rather than as independent non-executives – actually dropped during that time, from 7.7% in October 2017 to just 6.4%.

Many businesses claim that it is difficult to find women with the right experience to become directors, but many are also failing to promote women internally.

Valeur, a former banker in Denmark and London who went on to chair the FTSE 250 real estate firm Kennedy Wilson Europe, has restructured the IoD board since she arrived. The new board has a 50/50 split of men and women, and 30% are not white.

“People don’t like change,” she said. “Talent of all kinds is out there, but you have to consciously look for it.”

Valeur’s comments come as she tries to rebuild the reputation of the IoD, which was engulfed by scandal following a leaked report alleging that her predecessor, Barbara Judge, had made racist and sexist remarks and bullied members of staff. Judge, who denied the allegations, resigned in March 2018 after the IoD suspended her.

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Stephen Martin, the IoD’s director-general at the time, also resigned in January. Martin is thought to have recorded conversations with Judge that formed part of a report into her conduct.

Valeur said Martin was not asked to resign by either her or the IoD’s board, and denied that the scandal had done “irreparable damage” to the institution’s reputation. “There might have been a dent ... but we move on,” she said.

The headhunting firm Odgers Berndtson has been hired to find a new director-general, who will have a brief to increase the IoD’s focus on corporate governance and arrest a decline in member numbers.

The IoD is one of the business lobby groups that meet the business secretary, Greg Clark, to put across the views of their members.

A majority of IoD members want to avoid the disruption of a no-deal Brexit, according to their surveys. Nearly a third are planning to relocate some of their operations abroad or have already shifted them to cope with a such a scenario, the IoD found last month.

Valeur said: “Uncertainty is killing us right now, and politicians need to make decisions. That’s what we voted them in for – so that business can continue doing what they do.”

Valeur also called for directors of quoted companies to take a more responsible approach to executive pay.

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Pay for chief executives at Britain’s biggest listed companies rose more than six times faster than wages in the wider workforce in 2017, and the average boss’s pay packet hit £3.9m.

“If you start your own company and you run your own company, you can pay yourself as much as you want,” said Valeur. “If you run a company that other people’s money is funding, you have to be having a proper balance between what you get paid and what the company earns.”

That balance should extend to executives when companies are cutting costs, Valeur said. “I think we all have to share the pain when there’s pain to share.”