Government ministers have thrown their weight behind the inclusion of equality, diversity and inclusion responsibilities in corporate governance codes.

The statement came in the House of Lords as the government’s minister in charge of the football governance bill defended the inclusion of diversity and equality measures in a new governance code proposed for football clubs.

Baroness Twycross, minister in charge of guiding the bill through the House of Lords, responded to criticism by declaring the government’s support for diversity and inclusion in governance.

Describing DEI, or EDI as it is known in the UK, a “very standard addition” to governance codes, Baroness Twycross said the government had “not changed our view that equality, diversity and inclusion is a key part of good corporate governance.

“Research has shown that diversity on boards and in organisations promotes better governance, decision-making and transparency, all of which in turn contribute to improved financial sustainability.”

DEI and EDI have become a major focus of attention since Donald Trump arrived in the White House for his second term as US president. In a succession of executive orders, Trump has ordered federal bodies to end DEI policies, prompting many companies to announce they too were closing down their own diversity projects.

Falling interest rate

This week, the Financial Times reported that US companies had begun dropping mention of DEI in their annual reporting.

Some commentators are worried that the development could spread to the UK. There have been anecdotal reports that US clients of UK advisers have de-emphasised their interest in diversity and inclusion, as well as in sustainability projects.

The UK’s corporate governance code, updated last year, maintains focus on diversity. Principle J of the code says, of boardroom recruitment, that both “appointments and succession plans should be based on merit and objective criteria.

“They should promote diversity, inclusion and equal opportunity.”

The code further says boardroom evaluations should consider a board’s “performance, composition, diversity”.

Elsewhere in the code, Provision 23 says annual reports should detail nomination committee work on the “policy and any initiatives on diversity and inclusion, their objectives and link to company strategy, how they have been implemented and progress on achieving the objectives; and the gender balance of those in the senior management and their direct reports.”

The football governance bill will establish an independent football regulator who will develop a governance code for football; the code will, in turn, include diversity requirements.

At the beginning of the week, the government faced a proposed amendment to the bill, calling for removal of “explicit” references to EDI.

Kicked into touch

Lord Jackson told the House of Lords that he opposed the “compulsory and draconian” EDI measures in the football code.

“It is heavy-handed and diverts resources from excellent existing community engagement initiatives that have developed organically over the last few years in grass-roots football.”

He added it would “encourage diverse and divisive litigation”.

Lord Jackson praised the Financial Conduct Authority and the Prudential Regulation Authority, which last week dropped their plans to add to diversity rules.

Lord Jackson’s amendment to the bill was defeated.

The Institute of Directors (IoD) has spoken in favour of diversity policies in the wake of a rapidly changing US business culture. Roger Barker, policy director at the IoD, said: “Keep calm and carry on. A constructive approach to inclusion and diversity makes sense from a business perspective, despite the political headwinds.”

Doyin Atewologun, founder of Delta Leadership & Inclusion Consulting, and a steering committee member of the Parker Review on ethnic diversity in UK business, writes: “Board members, as individuals and as a collective, must resist making hasty, reactionary decisions in the current wave of ‘anti-wokeness’. The work required to build fair, inclusive business where all talent thrives to retain competitive advantage is too important and too complex for superficial responses.”