knowledge 22 April 2026 |

Diversity and Inclusion: CBI publishes board effectiveness review relating to D&I across fund management company sector

Overview

In April 2026, the Central Bank of Ireland published its feedback report setting out the findings from its board effectiveness review through the lens of diversity and inclusion (D&I) across the fund management company sector. While D&I reviews have previously been conducted in both the banking and insurance sectors, prior to this review no standalone D&I review had been conducted in the fund management company sector.

The CBI highlights that while some fund management companies are making progress, significant gaps remain in board effectiveness in relation to D&I. The report finds that diverse and inclusive boards are better equipped to manage risk, improve decision-making and strengthen governance, yet some firms still focus narrowly on observable diversity characteristics such as gender, with insufficient attention to diversity of thought and inclusion.

The CBI urges fund management companies and other regulated firms to assess their governance frameworks against the review’s findings, address identified shortcomings and embed D&I more consistently to ensure boards remain effective, independent and fit for purpose.

Key points from the review

Diversity and Inclusion

The CBI noted that a diverse and inclusive board is better positioned to operate effectively, manage risk and deliver sustainable outcomes for all stakeholders and in that regard observed the following good practices:

• A structured approach to D&I evidenced through charter memberships, active board sponsorship, and embedding D&I into governance structures;
• Board and senior management team (SMT) membership in firms generally reflected diverse professional and educational backgrounds; and
• The use of tools to help identify and reduce gender biased language, gender neutral job descriptions, diverse interview panels at senior levels of the organisation, and ongoing engagement and challenge by HR in terms of prospective candidates.

The following areas for improvement were also noted:

• Some firms focused primarily on observable diversity characteristics (e.g. gender) while not fully considering, proactively recognising, or discussing other diversity characteristics, such as diversity of thought;
• The review identified some gender imbalances at both board and board committee levels, with a significant gender imbalance remaining at the SMT level across some of the firms reviewed;
• Some firms mistakenly equated D&I with Corporate Social Responsibility activities such as charitable donations and community engagement;
• Not all firms had diversity targets or metrics in place; and
• Few firms implemented local D&I reporting, board level D&I training, or board-level sponsorship.

Firms should therefore seek to implement diversity targets and local D&I reporting, local board D&I training, or board-level sponsorship while also considering a more consistent approach when implementing D&I within the firm.

Independent Non-Executive Directors

While INEDs performed the role of board chair in most firms, which is in line with good practice observed across other industries, several INEDs were observed to have been in place for a prolonged period, in some instances for 10+ years. The CBI has previously communicated the need for firms to regularly assess director tenure as part of board composition reviews.

Where an INED has been in place for a prolonged period of time, the independence of the Director should be formally and comprehensively assessed at least annually and consider the appropriateness of the continued use of the INED designation.

Board Evaluation

The review identified the following good practices for board evaluation:

• A structured and comprehensive approach; and
• The inclusion of gender diversity within the board skills matrix, helping to embed D&I considerations directly into the evaluation process.

However, the areas for improvement were identified as follows:

• Some firms relied primarily on self-assessment questionnaires, while broader assessments such as skills gap analysis and attendance reviews were not applied;
• Many evaluations used a simple affirmative/negative response format, which limited the depth and usefulness of insights gained; and
• D&I considerations, particularly around inclusivity, were often absent, reducing the evaluation's effectiveness in enhancing board dynamics. 

Therefore, firms should work toward enhancing the assessment methods and implement skills gap analysis and attendance reviews which include D&I considerations such as inclusivity while limiting the use of the affirmative/negative response format.

Succession Planning

Although all firms inspected had board and SMT succession plans, their quality varied significantly indicating a wider lack of consistency across firms.

The report highlighted the following good practices:

• Some firms had comprehensive succession plans outlining named successors, clearly defined time horizons and detailed skills matrices;
• A number of firms had clearly documented, for each of the key personnel, their principal activities, responsibilities, and the skills, competencies and experience a successor would require. Some also indicated whether a successor was ‘ready now’ or required further development, and noted which skills were missing from the board and SMT within their skills matrix; and
• One firm maintained a named panel of potential successors for INED roles, from which future appointments could be drawn, a practice that supports succession readiness. 

However, some succession planning policies lacked clarity on how succession plans influenced board and executive appointments; D&I considerations were largely absent, even in firms with diversity targets; and in some instances, succession plans were out of date following turnover of named successors, did not include a version control, and did not assign responsibility to any individual for succession planning within the firm.

Strategic Decision Making

The review identified that firms adopted varying approaches to strategic decision-making.  Some good practices were identified, including, 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, a clear formal decision-making structure was observed when decisions were made.

However, the report also identified the following areas for improvement: 

• Some firms did not have a standalone decision-making policy and documentation of the strategic decision-making process was often insufficient;
• The review identified instances where key decisions were made outside of formal board meetings without clear summaries or records documented; and
• Although the board minutes in most firms evidenced the approval of the actual strategic decision, many did not evidence the discussion, challenge, or voting process that led to the approval. 

Establishing and embedding robust strategic decision-making processes can enhance the quality and effectiveness of board decisions therefore firms should aim to implement such processes. Firms should also consider addressing circumstances where significant decisions are made outside formal board meetings and providing greater transparency into the votes approving decisions.

Conclusion

The report has identified that although good practices exist across many of the firms examined, there is scope for improvement in all areas of D&I in order to bring the industry to where regulators expect it to be. Given the level of detail provided by the CBI, it would be prudent for fund management companies to conduct a gap analysis against the report and consider the recommendations provided above to address any gaps identified.

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