Diversity and representation in 2021

Learn more about the three areas of focus for any business owners and management teams seeking new investment in 2021.

During 2020, investors faced mounting pressure to establish more diverse representation across the leadership of the companies that they fund. As far back as 2017, Sir John Parker led a government-backed review of representation in the UK’s FTSE 100 companies. Among a comprehensive list of recommendations made was the aim for all FTSE 100 boards to have at least one director from an ethnic minority background by 2021 – a target known as ‘One by 2021’.

In February 2020 – a year that saw both the #MeToo and Black Lives Matter movements – an update to the review of FTSE 100 companies in the UK reported that 37% of companies do not have ethnically diverse representation on their board.

While progress towards ethnic representation has been glacial within the UK’s largest businesses, there is positive news in terms of female board representation. The target, set by the Hampton-Alexander Review, for at least 33% of FTSE 350 companies to have female board members is now being met.

For the UK’s start-ups and small businesses, attention has turned to angel investors and venture capitalist firms, many of whom now have specific targets to meet in terms of representation, equality and diversity. These remain central issues for investors.

Below, we set out three areas of focus for any business owners and management teams seeking new investment in 2021.

Diverse representation at board level is no longer just ‘nice to have’. The time to act is now, otherwise your business may be penalised in the process of seeking investment.

For example, in 2020 the Investment AssociationLink opens in a new window (essentially the trade body and industry voice for UK investment) issued its highest-level warning to 22 companies that had no more than one woman (or less than 20% female representation) on their boards.

The issue is real – potential investors will scrutinise your business and your policies.

Transparency remains essential, not just to your investor pitch but to your plan and your overall growth. Social issues are front and centre in investors’ minds at present, and businesses everywhere are being ‘found out’ if they take what’s described as a ‘one and done’ approach in terms of their boards’ diversity.

Simply hiring a board member to tick a diversity and inclusion box will not suffice. Investors won’t be satisfied with just a photo of people of various ethnicities, genders and backgrounds in the ‘Meet our team’ part of your slide deck. They will want to hear your plan for the future of your inclusive and diverse workforce, so make sure you have one.

The trend for investors in 2021 is towards businesses and people of genuine purpose.

Nothing will give your diversity statement greater authenticity than it actually being true. If your business is open to the opportunities a diverse and inclusive board presents, it will reap the benefits of that diversity before, after and throughout any stage of the investment cycle.

Diverse boards offer different perspectives and lines of thinking. This can lead to both insight and advocacy in previously unreached markets, and should form part of your plan for growth, not just for your investor pitch.

Invest in Women Hub

Run by the Council for Female Entrepreneurs (CfiFE), this is a one-stop-shop information and guidance resource created to help the UK Government achieve its ambition of increasing the number of female entrepreneurs by almost 600,000 by 2030.

Find out more Link opens in a new window
Invest in Women Hub

Regional support

Enter your postcode to find business support and case studies from businesses within your region. You'll be taken to our interactive map.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.