Bellwether 2022

FTSE 350 Boardroom Bellwether survey

The FTSE 350 Boardroom Bellwether is a yearly survey by the Financial Times and The Chartered Governance Institute UK & Ireland that seeks to gauge the sentiment inside British boardrooms. It canvasses the views of FTSE 100 and FTSE 250 company secretaries to find out how boards are responding to the challenges of the economy, market conditions and the wider business and governance environment.

Questions cover a range of business concerns, topical issues and specific governance matters to provide unique insight into what British boards are thinking. Some questions change from survey to survey, but the core remains the same to reveal trends and shifts in opinion.

The report summarises the key findings of the latest survey, which took place in April and May 2022.

The business environment

When we published the last survey in the summer of 2021, respondents were overwhelmingly optimistic about global, UK and industry economic conditions. At that time, COVID-19 vaccination rates were on the rise and although the pandemic was (and remains) far from over in many parts of the world, businesses saw the light at the end of the tunnel as far as the economy was concerned.

When the latest survey was sent out in April 2022, the international community had been rocked by Russia’s invasion of Ukraine, the biggest conflict in Europe since the Second World War. For many respondents, this meant not only increased concern for people and operations in the affected territories, but also a dramatic swing to the negative in terms of their expectations about the economy.

In the latest survey, 76% of respondents expect a decline in global economic conditions in the next 12 months, and 76% also expect a decline in UK economic conditions. The picture is slightly more optimistic for respondents’ own industries, with 47% expecting a decline and 32% expecting no change.

This is in marked contrast with the results from the summer 2021 survey, when 96% of respondents expected the global economy to improve, 79% expected the UK economy to improve and 81% expected improvement in their own industry’s economic conditions. The responses to the questions about the global economy represent the greatest swing and by far the most pessimistic global outlook in the 10 years of the Bellwether.


For the first time in the Bellwether’s 10-year history, no one answered ‘not diverse’ or ‘definitely not diverse’ when asked how diverse their board is in terms of gender. This is a considerable shift from the first survey in March 2012, when 62% of respondents answered 1 or 2 on a scale of 1 (‘not at all diverse’) to 5 (‘very diverse’). These findings reflect a wider, positive picture: according to the FTSE Women Leaders Review published in February 2022, 39% of UK FTSE 100 and 37% of FTSE 250 board positions are now held by women, putting the UK in second place behind France in the world ranking of representation of women on boards of public listed companies.

When it comes to questions about the gender pay gap within companies, the responses reveal an interesting trend. Some 68% of respondents answered ‘no’ to the question ‘Has reporting your gender pay gap resulted in change to your company’s pay policies or strategies?’ – but 71% say that they will be ‘taking action to reduce the gender pay gap’. This should be taken as a sign that most companies have now completed the process of changing their pay policies and strategies, and are now turning their attention to putting those policies and strategies into practice.

More than three-fifths (63%) of respondents consider their board members to be ethnically diverse, up from 55% in the summer of 2021. Interestingly, although more say that their board is not diverse this time (34% compared to 21% in summer 2021), the number of respondents answering ‘neutral’ has fallen from 18% to just 5%. This leads to the conclusion that boards have become more aware of their ethnic makeup. This is perhaps a result of external influences such as the publicity around Black Lives Matter and internal pressure from their own staff, but is almost certainly driven by the Parker Review into the ethnic diversity of boards, which in March 2022 announced that 89 FTSE 100 companies and 128 FTSE 250 companies had minority ethnic representation on their boards.

That being said, there is evidently still much to do around ethnic diversity in companies in general. Fewer than half of respondents (45%) say they are satisfied that their current policies and guidelines about minority ethnic groups in the workplace are fit for purpose, with a large proportion sitting on the fence (47% answered ‘neutral’ on this issue).

This may be because boards were anticipating the introduction of mandatory ethnic pay gap reporting, which has been put off for the time being but not completely ruled out. The government’s current approach is to encourage voluntary ethnic pay gap reporting with guidance from the Department for Business, Energy and Industrial Strategy. The survey asked whether boards are reporting on ethnic pay gaps or have plans to do so: 16% report already (twice as many FTSE 100s as FTSE 250s said this), 13% plan to report in the next year and 5% in the next three years. The majority (63%), however, appear to be waiting for a firm decision from the government as their answers reveal they are unsure of their plans.

Risk and compliance

With war having broken out in Europe, boards’ perception of risk has flipped since the last survey in summer 2021. Almost 4 in 5 (79%) respondents say their exposure to risk is increasing. ‘Global economic risks’ is given as the most common major factor (40% of the respondents who answered that risk is increasing), followed by ‘geopolitical tension’ (27%) and ‘cyber risk’ (23%), much of which is attributable to the conflict in Ukraine. 

Climate change, which in summer 2021 was the most common major risk factor (given by 28% of respondents), is cited this time by only 10% of those who believe risk is increasing. The pandemic, artificial intelligence and growing trade protectionism were offered by the survey as possible major risk factors but ticked by no one. This means there is more consensus on the main risks than in previous years.

The survey asked about boards’ views on the main issues related to the war in Ukraine, inviting them to choose and rank several options. Ensuring compliance with sanctions is the biggest concern: 63% of respondents include this in their answer, with 47% giving this as their top or only response. Reviewing supply chain commitments with Russia comes next, appearing in the answers of 47% of respondents, with 26% putting it as their top or only answer. The safeguarding of employees is the next most important issue: 39% include this in their answer, with 11% putting it top or as their only response. Reviewing business commitments with Russia is similarly notable, as 29% cite it in their response, and 13% put it as their top or only answer. This was evidently not an exhaustive list of possible issues for boards, however: 11% include ‘other’ in their answer.

Boards’ exposure to cyber risk is increasing, according to 87% of respondents, with the rest saying it’s going neither up nor down. No one says it is reducing, the first time since 2014 that this has happened. Otherwise, the figures are similar to the summer 2021 responses (88% increasing, 2% decreasing and 10% neither). Some 82% of all respondents also said they were increasing spending on mitigating the risk.

While there is evidently much concern over cyber risk, fewer respondents than in the summer of 2021 say they have discussed or reviewed the NCSC’s Cyber Security Toolkit for Boards (42% this year compared to 50% last year). Not everyone chose to answer the question about what action they have taken following discussion or review of the Toolkit (81% of those who had discussed or reviewed), but the responses of those who did range from ‘none’ to ‘established a dedicated cyber security committee’ and ‘we have a risk programme in place based on the NCSC Toolkit’.

Artificial intelligence (AI) is being discussed by a greater proportion of boards than in the summer of 2021: 58% say they have discussed the risks and opportunities, up from 42% last year. Broken down by company size, it’s the larger companies that are more likely to be discussing AI at board level. Of those who had discussed it, 77% are FTSE 100 companies and 23% FTSE 250s. Of those who hadn’t discussed it, 44% are FTSE 100s and 56% FTSE 250s.

The environment

Climate change might have been knocked off the top of boards’ risk list by geopolitical concerns (see page 14) but, despite that, it is very much a board-level issue – now more than ever.

All respondents (100%) say they have discussed issues relating to climate change in the past year, with only 3% having done so just once, 37% two or three times, 39% four to six times and 21% six times or more, meaning some boards are probably discussing climate change at every meeting. As recently as the summer 2019 survey, no one said they discussed climate change six times or more in the past year, with the largest proportion (34%) discussing it only once. With climate-related financial disclosures for the largest companies now mandatory this shift should be expected, but it also represents a change in corporate culture where the environment and climate are increasingly expected to be taken into consideration in board-level decision-making.

Only 8% of respondents say they have not published plans to tackle climate change, a considerable decrease since summer 2021 when 29% had not published. All the rest have published, but with no consistency in terms of the period that the plans cover. Long-term plans (15 years or more) marginally win out (29%), followed by five years or less (26%), 10–15 years (24%) and 5–10 years (13%).

Published ambitions to become net zero are also becoming ubiquitous. Almost 9 in 10 (89%) say they have published such a plan, a 32 percentage-point increase on summer 2021 when only 57% had done so.

All respondents (100%) say they use Taskforce on Climate-related Financial Disclosures (TCFD) rules to report on measures to combat climate change, with almost all (97%) putting this at the top of their ranked list of measures used. However, most use multiple measures to report and they were invited to choose from a list of other possible reporting mechanisms: 79% report using sustainability reports, 76% net zero commitments, 71% ESG reporting, 16% impact reporting, 3% nature impact reporting (Taskforce on Nature-related Financial Disclosures) and 3% ‘other’.

Corporate governance

Earlier this year, when the government lifted pandemic restrictions, many UK workers faced a new reality. For those in office-based roles, working from home had become normal and even desirable. As is shown in this survey (page 8), many respondents have made permanent changes to ways of working, acknowledging that employees appreciate greater flexibility.

The survey asked how boards’ approaches to understanding employee views had changed during the pandemic, and some report carrying out more ‘pulse’ surveys of colleagues and more engagement. One says that NEDs are now holding virtual meetings with focus groups of employees. Many point to the use of technology to allow more virtual engagement: universally seen as positive in terms of widening their reach to employees around the world, although some say they are reverting to physical meetings now.

It is unsurprising, then, that corporate culture makes a regular appearance on board agendas. Only one respondent says corporate culture had not been discussed at all – which in fact is one more than in the last survey in the summer of 2021. As for the rest, the greatest proportion (39%) has discussed it two or three times, 32% four to six times, 18% six or more times and 8% just once.

These figures are almost the same as those from the summer 2021 survey results but with slightly more this time discussing it six or more times (16% in 2021) and fewer discussing it four to six times (37% in 2021).

The issue of how much chief executives are paid remains high on the media’s agenda. In May 2022, the pay for CEOs of FTSE 100 companies was reported to have bounced back to pre-pandemic levels despite a cost of living crisis that is leaving many working people unable to afford the basics, prompting much commentary around the ethics of executive pay.

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