Much has been made of the progress in recent years on improving gender diversity in the board rooms of the UK’s largest listed companies. Yet the figures for boards on London’s junior AIM market tell a very different story.

Women hold just 16.8% of AIM board seats and more than a third (37.2%) of AIM boards remain entirely male. The share of companies with two or more female directors has actually fallen since last year, from 28.7% to 27.3% and, at the current pace of change, AIM companies will not match the FTSE 350 40% female representation target until 2049.

It is clear that progress on AIM therefore remains too slow. Far too slow.

This matters because cognitively diverse boards benefit from stronger decision-making and visibly diverse and inclusive leadership can help attract top talent to support performance and growth. While this view may have been contentious in times gone by, it’s now consensus: from FTSE 350 companies and governance professionals to the QCA and London Stock Exchange.

Our recent report in collaboration with Addidat, Gender Diversity in AIM Company Boards, paints a picture of a market that has talked about boardroom diversity for years without translating that conversation into consistent, meaningful action and improvement.

Not just a representation issue

Lack of diversity extends beyond representation and directly impacts the quality of governance and decision-making. With most boards still lacking meaningful female participation, particularly in key leadership roles, diversity of perspective is often too limited to create real challenge or drive better outcomes and more effective decision-making.

Peter Swabey, policy and research director at The Chartered Governance Institute UK and Ireland, puts it plainly in the report’s introduction: “boards comprised of individuals with different backgrounds, experiences and perspectives benefit from the diversity of thought that generates challenge, innovative ways of looking at things and new ideas.” He goes further, arguing that boards which do not take boardroom diversity seriously are “not fit to govern a UK company”.

The data reinforces the point: 72.2% of AIM boards have no women in CEO, CFO, chair or senior independent director roles; nearly three quarters of boards have only one woman or none at all. In the absence of women in the most influential roles, the structural levers for change remain largely out of reach.

AIM’s flexibility has long been one of its defining strengths. The less prescriptive nature of diversity expectations under the QCA Corporate Governance Code and AIM Rules is consistent with the AIM ethos of providing flexibility and limiting regulatory burdens. This also means that other measures of diversity are under-reported, leaving gender statistics something of a proxy for broader diversity on AIM.

The QCA Code was refreshed in 2023 and, although this encouraged boards to consider diversity more thoughtfully, the data suggests that this has not yet been enough to shift behaviour. Without stronger expectations, boards can easily fall into the trap of continuing to recruit in familiar ways and from familiar networks without examining whether those habits are still serving them well. If you don’t do things in a different way, the outcome is unlikely to change.

What good looks like

Among the AIM companies that meet the 40% female board representation threshold, Sanderson Design Group plc is one firm that particularly stands out. With both a female chair and a female chief executive, it shows that meaningful representation at the most senior levels is achievable on AIM.

Lisa Montague, CEO of Sanderson Design Group plc, is clear about what has driven progress and what is holding it back: “I am very fortunate to have been given opportunities in my career, and I have always believed in making the most of them,” she says. “But when we look at progression to senior and board roles more broadly, we should be honest that it can still depend too much on chance, for example who notices you, who advocates for you, or whether you happen to find the right mentor or sponsor at the right moment. If we want to create lasting change, we need to be more deliberate about building pathways so that talented people are identified early, developed well and given the exposure they need to step up.”

The companies making progress are doing so deliberately: identifying talent earlier, developing it more systematically and creating clearer routes into senior leadership.

As an example, Montague points to one practical mechanism that is underused across the market, the value of external non-executive experience as a development tool for senior leaders: “While there’s no single route to becoming board-ready, one valuable development opportunity for senior leaders is exposure to a different board environment through an external non-executive role. Where that can be done appropriately and away from direct competitors, it can broaden perspective enormously. It gives individuals the chance to see strategic debate, governance and decision-making in a different context, enabling them to bring that learning back into their own organisation. Used alongside other development approaches, this can really help strengthen the pipeline for future executive directors.”

From recognition to action

The key issue is not a lack of board-ready women with valuable governance credentials. The 70 AIM companies already meeting the 40% threshold show that the talent exists. The question is whether boards are willing to look for it and willing to develop it.

The conclusion is straightforward. AIM companies need to move from discussion to deliberate succession planning and more active leadership development. It is clear that change will not happen without clear expectations and the adoption of active plans to address a lack of diversity where it exists. We are hopeful that all AIM market participants, including boards, investors, advisers and those with the power to shape market expectations, will collaborate on defining the steps to accelerate change.

That means building structured pathways for talented people earlier in their careers, creating the mentoring and sponsorship frameworks that can take the luck out of progress, casting the net wider than existing networks when it comes to recruitment, being thoughtful about the attributes that are really needed when selecting board members so as not to artificially restrict the pool or create a homogenous board, and encouraging senior leaders to seek out external board experience where it is appropriate to do so.

The 2049 projection is a stark reminder of the challenge that lies ahead and shouldn’t be treated as an inevitability. Indigo and Addidat have called for an active debate on how progress can be accelerated. The question for AIM boards now is whether they are willing to act.

Bernadette Young is Chief Executive of consultancy Indigo Governance