Following a consultation with industry stakeholders held earlier this year, the Walker Guidelines have been updated to include disclosures around portfolio company gender diversity, business models and human rights matters.
The voluntary guidelines ask private equity-backed businesses to match transparency standards already in place for UK publicly listed companies on the FTSE350 index. Last year UK quoted companies were required to begin reporting on gender diversity, human rights issues and other matters, leading the Guidelines Monitoring Group (GMG), the guideline’s oversight body, to follow suit. Unlike public companies however the Walker Guidelines include more flexibility in how portfolio companies define a “senior manager” for purposes of gender diversity reporting.
Under the updated guidelines, there will also be a requirement for portfolio companies to include a specific “statement of conformity” in their annual reports confirming compliance (or explaining any non-compliance) with the guidelines.
However some new requirements for quoted companies will not be incorporated into the Walker Guidelines, such as disclosing information on greenhouse gas. The GMG also will not lower the threshold for which companies are required to comply with guidelines, as was suggested late last year.
The additional disclosures around gender diversity and human rights matters may expose the UK industry to heightened scrutiny. Already the industry has faced criticism for it’s lack of female leadership at the management firm. Less than half of GPs have a female managing partner that has influence or control over the investment decision making process, according to a recent Rothstein Kass survey of 215 private equity firms, the large majority of which were US-based.