The heat has been put on boards that fail to manage compliance with diversity targets, after key investor representatives issued broadsides against those with too few women in place.

Legal & General Investment Management’s (LGIM) 2017 Corporate Governance Report shows that the institutional investor has set a tougher outcome for boards that fail to manage female representation.

From 2018 it will vote against chairs of FTSE 350 companies if they have failed to achieve 25% of women at board level. LGIM had previously set its stall out to vote against chairs that showed a “lack of diversity”.

It will also vote against “ill-conceived or poorly implemented” diversity policies and has begun voting against all-male boards in S&P 500 companies.

LGIM is also looking at the quality of diversity policies. “We consider a company’s workforce as important as its financial assets and expect that better policies and disclosures regarding diversity should be well developed,” states the report.

All-male boards

The Investment Association and the Hampton-Alexander Review have written to 35 FTSE 350 companies to increase female representation at leader level. Some 14 FTSE 100 companies are included in the list, with BP and Smurfit Kappa Group highlighted as having all-male executive committees.

FTSE 250 businesses such as Sports Direct and Stobart Group have all-male boards, while Persimmon and TUI have been asked to explain their “poor gender balance”. In 2017 Sir Philip Hampton and the late Dame Helen Alexander reviewed ways to ensure that talented women at the top of business are recognised, promoted and rewarded.

“A number of key investors have told us that they will vote against AGM resolutions on the grounds of gender representation,” said Chris Cummings, chief executive of The Investment Association. “With the AGM season now in full swing, companies who are falling short should take urgent steps to outline what they plan to do to increase diversity.”