Shareholders must speak out to spur on real change in the sex balance of British boardrooms, a group of UK business leaders and investors urged on Friday.

On the first anniversary of the Davies report, which called on British companies to more than double the number of women on their boards, members of The 30 Percent Club -- named after the target for female representation -- said investor support was crucial to the success of the cause.

The real power base to demand that behaviour is modified is in the hands of the owners, said Roger Carr, founding member of the club and chairman of energy company Centrica , where a quarter of the board is female.

Shareholders have to truly, as stewards, leverage their position of real strength to effect boardroom behaviour.

Established in November 2010 and composed of the chairmen and chairwomen of 37 British firms as well as investors who in total manage over 1.77 trillion pounds ($2.78 trillion) of assets, the club hopes to hit its 30 percent target by 2015 by coordinating the investment community's approach.

This is higher than the 25 percent target recommended by the Davies report a year ago, named after and conducted by Lord Mervyn Davies, former CEO of Standard Chartered and former UK trade minister.

As it stands, 15.2 percent of FTSE 100 company board directors are female, up from 12.5 percent at the end of 2010. For the FTSE 250 it is 9.4 percent, up from 7.8 percent.

CARROT AND STICK

Legal & General Investment Management (LGIM), one of Europe's largest institutional investors, with £347 billion in assets, feels it is in a particularly strong position to implement changes because it holds 4 percent of the whole UK stock market.

The carrot and stick is annual re-election, Sacha Sadan, Director of Corporate Governance at LGIM said. After two or three years of not seeing any changes, then we will vote (to make) things change.

In May 2010, changes to the UK Corporate Governance code announced by the Financial Reporting Council (FRC) called for the annual re-election of board members of all FTSE 350 companies.

Sometimes there is a sense people are scrambling around for new sticks, when this is a very powerful stick, Baroness Hogg, Chairman of the Financial Reporting Council said.

Investors now have this powerful tool, and to be talking about that will raise the game.

In October 2011 the FRC also announced changes that require listed companies to report annually on their boardroom diversity policy and on any measurable objectives the board has set, which will enable shareholders to vote for change if targets have not been met. These measures will not be enforced until October.

BOARDROOM ATMOSPHERICS

Investors and business leaders insist that the drive to get more women on board is driven on merit, with the ultimate goal of making companies more profitable and efficient.

Having women on the board really does make a difference, said Robert Swannell, chairman of Marks & Spencer, where 29 percent of the board is female.

Swannell expressed surprise that more shareholders in the past had not spent time understanding how the boards of companies they invest in operate.

If all of you as investors could sit on boards and see the difference between boards with open atmospheres and those with dysfunctional atmospheres, you would be terrified by the latter and try and encourage the former.

BATTLING QUOTAS

By encouraging investors to take decisions into their own hands, the 30 Percent Club is hoping to pre-empt any attempt by the UK government or the EU to impose quotas.

Speaking at an event in Sweden earlier in the month, Prime Minister David Cameon said that while he did not favour quotas, they might have to be imposed if companies could not tackle the gender gap on their own.

In March, EU Justice Commissioner Viviane Reding is set to address the issue with an updated report on the Women on the Board Pledge announced last year to challenge companies in Europe to increase the number of women in board positions or face further action.

Unless we demonstrate by our own endeavours that we don't need press-gang legislation to get the balance of British boardrooms right, we might find ourselves in a minority opinion, Said Carr.

And as night follows day, if that is the case, then quotas will follow. ($1 = 0.6369 British pounds)

(Reporting By Anjuli Davies; Editing by Will Waterman)