Boardroom gender balance
International proxy advisory firm Institutional Shareholder Services (ISS) has released a report on the gender diversity of corporate boards across jurisdictions. As a measure of whether voluntary targets or quotas propel change, the report, titled Gender Diversity on Boards: a Review of Global Trends, shows that boardroom diversity is increasing globally, with:
- to date in 2014, women comprise on average 18.7 per cent of S&P 500 boards in the United States, which is an increase from 16.3 per cent in 2011
- in 2014, women comprise 18.5 per cent of London Stock Exchange FTSE 350 companies, which is an increase from eight per cent in 2008
- to date in 2014, women comprise an average of 14.7 per cent of ASX300 boards in Australia (AICD figures note that at the end of August 2014, ASX200 companies had 18.3 per cent of female directors)
- the percentage of women on boards of TSX Composite Index boards in Canada has increased to 14.6 per cent since 2008, which is an increase of approximately four per cent
However, the report notes that women still comprise less than 20 per cent of board positions on average in jurisdictions without quotas. In a speech at the Global Conference on Women in the Boardroom, hosted by The Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies, US Secretary of Commerce Penny Pritzker noted that women hold less than five per cent of Fortune 500 CEO positions, and less than 17 per cent of board seats at Fortune 500 companies, slightly lower than the ISS numbers. She also noted that 10 percent of Fortune 500 companies have no women on their boards at all. In her speech, Pritzker made an economic argument for adding women to the board. She said ‘Diversity in corporate leadership is not solely a women’s issue. It is an issue of economic competitiveness. And the presence of more women in the boardroom and in the corporate suite is critical to companies’ creativity, performance and ability to thrive in
While acknowledging that in countries such as Norway, where quotas have existed for some years, the percentage of women on boards is approximately 40 per cent, the ISS report finds that other countries with quotas for female representation on boards are struggling to meet the legislated target. It also notes that institutional investors are calling for greater gender diversity, which appears to be influencing director nominations globally.