Vince Cable calls on leading companies to appoint more women as directors

Business secretary Vince Cable said Britain is ‘on the home stretch’ towards improving boardroom diversity. Photograph: Murdo MacLeod

The business secretary, Vince Cable, has called on Britain's biggest companies to increase the number of women on their boards this year.

In a letter to the chairmen of the top 350 listed companies, Cable urged them each to appoint an extra female director in 2014 and to let two senior female managers serve as non-executive directors at another company.

The letter, written jointly with Lord Davies, who champions women on boards, also called on chairmen to publish targets for female representation at board and senior management level and to say how they would achieve them.

In 2011, Davies, the former trade minister and boss of Standard Chartered bank, set FTSE 100 companies the goal of increasing female board membership to 25% by 2015, from 12.5% at the time. The next biggest 250 companies were also encouraged to employ more female directors.

Women now make up 20.4% of FTSE 100 directors, meaning a further 51 are needed to meet Davies's target, according to figures from the Professional Boards Forum, which helps find and prepare female directors.

Cable said: "In the past few years we've made great progress in improving boardroom diversity and the momentum has turned. We're now on the home stretch and countries across the world are looking at the voluntary approach we've taken. We need to show them that we can get over the finish line."

The letter from Cable and Davies coincided with the London Stock Exchange appointing two women as non-executive directors.

Sherry Coutu is a former management consultant who invests in startup businesses and is on the finance board of Cambridge University. She will be joined on the LSE board by Joanna Shields, who has been chairwoman of Tech City UK since October 2012.

Their appointments are not included in the Professional Boards Forum figures for the current state of the FTSE 100.

The LSE was one of the few remaining FTSE 100 companies with no female directors and its move will leave the Chilean mining group Antofagasta and the commodities giant Glencore Xstrata as the only top 100 companies with all-male boards.

Jane Scott, the UK director of the Professional Boards Forum said there was no excuse for a company to have an exclusively male board.

"There is no shortage of candidates and there is no compromise on the experience or skills required," she said.

"Making senior women available as non-executives at other companies isn't rocket science but it's very practical and it increases the pool of women. If every company hired at least one more female director this year they would achieve the target."

Scott's figures show that 36 FTSE 100 companies have 25% or more female directors and that 13 of those have 30% or more.

There is more work to do in the FTSE 250 where only 49 companies have women making up at least 25% of the board and 22 companies with 30% or more female representation.

Because some companies have already gone beyond Davies's target, his overall target could be hit while many companies remain below 25%, Scott pointed out.

The government commissioned Davies's report because it was unhappy about slow progress in getting more women on to boards.

Concern about the makeup of boards was heightened by the financial crisis, which exposed "groupthink" on boards made up of men from similar backgrounds.

Research also suggests that companies with women on their boards perform better and are more responsive to their customers because they have a wider range of views at the top.

Davies rejected proposals to impose quotas on companies, as has been done in countries such as Norway, and instead sought to use persuasion to achieve his report's goals.