Good progress for diversity today. From October next year listed companies will have to report annually on their boardroom diversity policy, and progress against targets, or explain non-compliance.

The FRC has today announced its decision to amend the UK Corporate Governance Code to strengthen the principle on boardroom diversity, in response to Lord Davies of Abersoch’s recommendations in February this year.

The amendments will require listed companies to report annually on their boardroom diversity policy, including gender, and on any measurable objectives that the board has set for implementing the policy and the progress it had made in achieving the objectives. The FRC will also update the Code to include the diversity of the board, including gender, as one of the factors to be considered when evaluating its effectiveness.

The changes will be incorporated in an updated version of the Code to be published in 2012, and will apply to financial years beginning on or after 1 October 2012.

At a time when companies are desperately trying to find ways to maximise company performance, this is a very timely announcement. Gender diversity makes business sense. As Baroness Hogg, Chairman of the Financial Reporting Council, so succinctly put it: “Gender diversity strengthens board effectiveness by reducing the risk of “groupthink”, making fuller use of the talent pool and keeping companies in touch with their customers.”