Shareholders will be encouraged to punish FTSE 350 companies that don’t do enough to improve diversity on their boards.

Meanwhile ministers are urging FTSE firms to appoint more women in the wake of the Hampton-Alexander review.

The Investment Association, which runs IVIS, a paid-for information service on listed companies, said that for this year’s AGM season it would issue an “amber-top” tag for companies that do not disclose the ethnic diversity of their board, or do not have a credible action plan to achieve targets of having at least one director from an ethnic minority background by 2021.

IVIS does not recommend how fund managers should vote, but an “amber-top” or “red-top” recommendation reflects a breach of best practice or area of concern that could result in an abstention or vote against the resolution.

More than a hundred FTSE 350 companies are still not meeting the Hampton-Alexander review target of having at least a third of board positions held by women.

There are also 16 companies that still only have a single woman on their board — which the review describes as a ‘one and done’ problem. Which is at least an improvement on the 116 when the review started.