EU proposals to improve diversity in the boardroom and ensure transparency around a company’s ‘risk appetite’ depart from current UK thinking, City lawyers have warned.

A consultation on a framework for EU corporate governance published earlier this month asked whether more non-nationals should be represented on the boards of European companies to improve diversity and give directors a broader knowledge of regional markets.

It sought views on how this could best be achieved, and whether at a national, international or EU level.

The consultation also asked whether boards should ‘approve and take responsibility’ for a company’s ‘risk appetite’, through a risk profile that would be ‘set from the top’ and define clearly the roles and responsibilities of all parties involved.

Vanessa Knapp, principal consultant at magic circle firm Freshfields Bruckhaus Deringer, said the economic crisis has made companies think hard about risk management processes.

‘The consultation calls for better monitoring of the "comply and explain" rule, so that companies that depart from compliance will in future have to explain exactly why they did so,’ she said.

‘This is a significant change to UK thinking and is not just about more regulation. It is about making companies regularly check and review risk.’

Richard Ufland, corporate partner at City firm Hogan Lovells, said: ‘The great and the good have long subscribed to the zeitgeist of calling for greater gender diversity on boards.

'But quotas don’t work, either for gender diversity or for encouraging European companies to appoint more non-nationals to their boards.’

The Law Society’s Brussels office will hold a conference in London in June to discuss the consultation.