D&I and fund board effectiveness – Central Bank of Ireland’s Report

On 20 April 2026, the Central Bank of Ireland (the Central Bank) published its Feedback Report, "Board Effectiveness Review through the Lens of Diversity and Inclusion" (the Report).

Overview

The Report sets out the findings from the Central Bank's first standalone review of Diversity and Inclusion (D&I) in the Fund Management Company sector, which examined (among other things):

• Board, Senior Management Team (SMT) and Board Committee composition

• the board evaluation process

• succession planning

• strategic decision making

• broader D&I practices, including how D&I policies are assessed and the provision of relevant D&I training.

Although the review noted some positive practices, issues were identified in governance processes relating to board effectiveness in all firms - varying levels of understanding of D&I led to D&I being considered and embedded across these processes.

As a result, further work needs to be done within the fund management company sector to enhance board effectiveness through the lens of D&I.

The Central Bank expects fund management companies and other regulated firms to

• review and consider the findings of the Report

• examine their governance processes relating to board effectiveness through the lens of D&I against both the findings and good practices outlined

• develop and implement actions to mitigate risk where gaps or weaknesses are identified and

• continue to evaluate their arrangements to ensure they remain fit for purpose.

What the Report found

Looking at the Report's findings in more depth

A. Board, SMT and Board Committees - composition and effectiveness

The Report notes that a structured approach to embedding D&I within senior levels of an organisation can enhance both decision-making and overall effectiveness of the Board.

It also found that there were varying levels of understanding among firms when it comes to D&I's impact on governance.

Good practices included:

• adopting a structured approach to D&I through charter memberships, active board sponsorship, and the embedding of D&I within governance structures

• membership of Board and SMT reflecting diverse professional and educational backgrounds.

Some firms proactively addressed challenges in attracting diverse applicants at senior level by, for example, using gender-neutral job descriptions and engagement by HR in terms of prospective candidates.

Areas for improvement which the Report identifies, on the other hand, included that

• some firms failed to consider or proactively recognise diversity characteristics such as diversity of thought.

• there are some gender imbalances at both board and board committee level and "a significant gender imbalance" at the SMT level across some firms

• some firms mistakenly equate D&I with Corporate Social Responsibility (CSR) activities - e.g., community engagement - which do not directly address D&I in the workplace

• some firms did not have in place D&I targets and metrics, which the Report views as key in ensuring that levels of diversity within firms are maintained and actively strengthened

Independent Non-Executive Directors

The role performed by INEDs on Boards and board committees varied significantly, with firms showing an inconsistent approach to the value that an INED's independence brings to effective governance.

In line with good practice across other industries, in most firms a INED was Chair of the board.

Several INEDs, though, had been in place for a long period (in some cases, more than ten years) - in such cases, the firm should assess the Director's independence at least annually and consider whether it is still appropriate to make use of the INED designation.

B. Board Evaluation

While all firms conducted annual board evaluations, these varied in their degree of detail.

Good practices included

• the use of a board skills matrix (where directors assess themselves as "Very Experienced, Experienced or Limited Experience" with a rationale for the rating selected), as this can promote greater self-awareness of individual capabilities

• including gender diversity within the board skills matrix so D&I considerations are embedded directly into the evaluation process.

Areas for improvement included

• reliance on self-assessment questionnaires, without applying wider assessments such as skills gap analysis and attendance reviews

• evaluations which make use of a simple affirmative/negative response format - this limits the usefulness of insights gained.

• the absence of D&I considerations (in particular, around inclusivity, which reduces the effectiveness of the evaluation in enhancing board dynamics.

C. Succession Planning

Although all firms had board and SMT succession plans, the quality varied significantly.

Good practices included

• having comprehensive succession plans which outline named successors, clearly define time horizons and detail skills matrices

• clearly documenting the principal activities and responsibilities of each key personnel and the skills, competencies and experience a successor would require

• maintaining a named panel of potential successors for INED roles from which future appointments could be selected.

Areas for improvement included

• succession planning policies which lacked specificity and clarity as to how succession plans influence board and executive appointments

• the absence of D&I considerations, even where the firm has diversity targets

• succession plans which are out of date, fail to include a version control or do not assign responsibility for succession planning within the firm to any individual.

D. Strategic Decision-Making

The Report notes that firms adopt varying approaches to strategic decision-making.

Good practices included

• diverse project teams advising the board on the strategic decision under review

• well documented board strategic decision-making procedures

• clear meeting minutes demonstrating challenge and discussion

• establishing and embedding robust strategic decision-making processes at board meetings.

Areas for improvement included

• failing to have a standalone decision-making policy

• insufficient documentation of the strategic decision-making process

• key decisions being made outside formal board meetings with no clear summary or record documented

• failing to provide evidence, in the board minutes, of the discussion, challenge, or voting process that led to the approval of a strategic decision

• failing to conduct formal 'lessons' learned' post-decision reviews.