- 58% of UK financial services board appointments over the last year were female, relative to 50% across Europe
- Over the past two years, 56% of board appointments at UK financial firms were female versus 46% across Europe
- Female board members of UK financial services firms (59%) are more likely to have C-Suite experience than their European peers (51%)
- In the UK, 44% of firms monitored have board directors with professional sustainability experience; significantly above the 32% recorded across European firms
The UK’s largest financial services firms are leading Europe in taking proactive steps to increase female representation and enhance their sustainability expertise at boardroom level - both priority areas for investors - according to the EY European Financial Services Boardroom Monitor, which charts the profile, experience, training and skillsets of board directors in the MSCI European Financials Index.
UK financial services boards lead Europe on appointment of female board members
Forty-four per cent of investors* state that gender diversity in the boardroom significantly influences their decision to invest in a financial services company, compared to just 16% who say it does not influence their decision at all.
EY Boardroom Monitor data shows that UK financial services firms are responding to investor expectations and are leading European peers across a range of gender diversity metrics. Fifty-eight per cent of UK financial services board appointments over the last year were female, relative to 50% across European firms, evidencing the UK’s accelerated drive for a more equal gender balance behind the most recent board appointees. Over the past two years, 56% of board appointees at UK financial services firms were female and 44% were male, versus 46% female and 54% male across Europe.
The current gender split of board members across UK financial services firms stands at 43% female and 57% male. This is marginally ahead of aggregate levels across Europe, which stands at 58% male and 42% female, and is a five percentage-point increase from June 2022, when it was 63% male and 37% female.
At 34 months, the average board tenure for female directors at UK financial services firms is markedly shorter than the 54-month average tenure for female directors across Europe, reflecting the recent accelerated recruitment of female directors in the UK. The average board tenure for male directors at UK financial services firms is 50 months; again markedly lower than the European male average of 66 months, suggesting a higher level of turnover across UK financial boards relative to European counterparts.
The average age of female board directors at UK financial services firms is 58, younger than male counterparts with an average age of 61, and marginally older than peers in Europe, where the average age of female and male board directors is 57 and 60 respectively.
Anna Anthony, EY UK Financial Services Managing Partner, comments: “The drive for gender balance in the boardroom is playing out prominently across UK financial services. Ensuring that boardrooms reflect the diverse customers and societies they serve remains a work in progress, but the substantial increase in female representation in the past six months alone is particularly encouraging.
“Leaders across the financial sector are responding to the need for change, increasingly viewing diversity as a strategic priority. Given the role that diverse views, backgrounds and experience plays in identifying and responding to risks and in creating the challenge culture requisite to effective boards, we expect to see boards ramp up their focus on age and cultural diversity over the coming months.”
UK firms more likely to have female C-suite experience than European peers
Female board members of UK financial services firms are more likely to have C-suite experience than their European peers; 59% of female UK board directors tracked have held a C-suite role relative to 51% of female counterparts in Europe. Male board members at UK firms are also more likely to have C-suite experience relative to peers in Europe; nearly three quarters (73%) of male UK board directors have C-suite experience relative to 62% in Europe.
In the UK, gender diversity is highest across wealth and asset managers' boards, where 45% of directors are female and 55% are male, representing a five percentage point lead on the European sector, where the gender split is 40% female and 60% male.
It is lowest amongst UK bank boards, where 41% of directors are female and 59% are male. At UK insurance firms, the gender split stands at 43% female and 57% male.
In Europe, gender diversity is most balanced on boards in the banking and insurance sectors, where 43% of board members are female and 57% male.
UK lags Germany and France on age diversity
While financial services firms have taken proactive steps to drive gender diversity across their boardrooms, age diversity remains limited across much of Europe.
There are no board members under the age of 40 across UK financial services firms. The UK is not an outlier in this regard, however, as this is also the case for large financial services firms in Finland, Italy, the Netherlands, Spain, Sweden and Switzerland. In Germany, just a third of financial services firms monitored have a board member under the age of 40, and in France, 22% of companies monitored have a board member under the age of 40.
Only 10% of European financial services firms monitored have any board members under the age of 40, up from 8% in May 2022; a fifth (20%) of board members under 40 have been appointed in the last year.
UK leads on accelerating trend of appointing board members with sustainability expertise
More than half (51%) of investors believe boardroom experience in sustainability has a ‘significant’ impact in terms of making a company an attractive investment, with 22% indicating it has a ‘highly significant’ impact on a company’s investment case.
While just a third (32%) of European financial services firms currently have board directors with prior professional experience or expertise in sustainability, this is a significant rise since the first iteration of EY’s Boardroom Monitor in June 2022. At this point, just 19% of companies monitored had sustainability expertise within their boardroom.
In the UK, 44% of financial services monitored have board directors with prior professional experience or expertise in sustainability, significantly above the average across all European financial services firms monitored.
Financial services firms are stepping up their efforts to appoint board members with this expertise across sectors, yet wealth and asset management firms and insurers continue to lag the banking sector across both the UK and Europe.
In the UK, 66% of bank boards include individuals with sustainability backgrounds, compared to 50% of wealth and asset managers and 17% of insurers.
In Europe at large, forty-three per cent of bank boards (up from 34% in May) include individuals with sustainability backgrounds, compared to 32% of wealth and asset managers (up from 11% in May), and just 17% of insurers (up from 4% in May) with similar experience at board level.
EY analysis shows that across UK financial services firms, 57% of board directors with sustainability experience have been appointed within the last year. Of all board directors at UK financial services firms, 19% have been appointed within the last year, 20% of whom bring sustainability expertise.
Across Europe, 46% of board directors with experience in sustainability have been appointed within the last year. Of all board directors, 13% have been appointed within the last year, 15% of whom bring sustainability expertise.
Omar Ali comments: “In the past six months we have seen a big increase in the number of directors with sustainability experience appointed to financial services boards, albeit from a low base. Climate change presents both a systemic risk and significant opportunity for financial services, and we expect boards to continue to build this expertise at this accelerated pace. Achieving net zero is impossible without financial services; a key message coming out of COP27.
“From a governance and risk management perspective, to manage the transition and to attract essential investment, having a deep understanding of the materiality of climate risks and opportunities is seen by investors as a competitive advantage. Whilst most firms already count highly technical, specialist sustainability teams within their structure, they also need the right expertise at board level if they are going to make the progress they want to on the green agenda.
“If firms maintain the recent pace of appointing board members with sustainability credentials and continue to develop and grow the talent pipeline, the European financial industry will strengthen its position as a leading force on the path to net zero. As more firms look to make these appointments, competition for the best talent will increase.”
Sustainability experience is most prevalent among female board members, and more likely to be accompanied by higher-level educational qualifications.
Female board directors for financial institutions are far more likely to have professional experience in sustainability than their male counterparts according to the EY Boardroom Monitor. While the current gender split across financial services boardrooms stands at 58% male and 42% female, 72% of board directors with experience in sustainability are female.
The current gender split across UK financial services boardrooms stands at 57% male and 43% female; 64% of board directors at UK firms with experience in sustainability are female.
Board directors with experience in sustainability are also more likely to hold high-level educational qualifications. For example, 19% of board members (14% in the UK) with sustainability experience hold a PhD, relative to just 11% of all board members across European financial services firms (5% in the UK).
Whilst 18% of board members across all European financial services firms monitored have an MBA (19% of UK firms), 26% of board members with sustainability experience have an MBA (21% of UK firms). There is not a significant difference in terms of the gender or age of board members with higher educational qualifications.
Anna Anthony comments: “Board composition is fundamentally changing, and companies are building out their sustainability expertise and increasing female representation.”
Omar Ali concludes: “Chairs participating in the 20 22 EY Financial Services Chairs’ Interview Series told us that the best board members are those with the ability to think long-term, are resilient to short-term trends and stand up for their beliefs. They are looking to blend broad experience and specialist expertise to ensure the optimal position to pre-empt risks and change.
“Boards need to be future-proofed and built to contend with long-term structural shifts. This requires Chairs to navigate the balance of traditional and new skills on a space-limited board, which is particularly challenging currently, as firms operate in a heightened geopolitical and economic climate.”
About the EY Boardroom Monitor
This is the second launch of the EY European Financial Services Boardroom Monitor and data collection ran between January - November 2022, and updates on the previous launch from June 2022.
The EY Financial Services European Boardroom Monitor tracks and analyses data across a wide range of factors, including gender, age, professional experience and skills. It does not track the race and ethnicity of board members, as there is no standardized format for directors to disclose against.
The EY Financial Services European Boardroom Monitor is comprised of disclosable, publicly available data on board appointments at listed banks, wealth and asset managers, FinTechs and insurers across the UK, Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Spain, Sweden and Switzerland, using the MSCI European Financials Index as the core universe.
This release incorporates a survey of 300 European and UK-based fund managers who have, or are able to have, exposure to European financial services companies within their portfolios. The survey asks about the biggest risks to European Financial Services companies and where investors see the biggest skillset gaps within boardrooms.