Commentary

ICYMI, it’s not Only Boards That Need a Gender Balance

Change can be planned and gradual, or attempted in the heat of a crisis.

This week, we had an opportunity to reflect on the progress made by investors and corporates toward greater representation of women in leadership roles. Reports released to mark International Women’s Day and/or Women’s History Month suggested progress remains gradual, despite the evident benefits.

According to the Diligent Institute’s study of more than 5,000 corporates globally, 26% of board positions are held by women, accounting for 37% of new appointments (versus 35% previously). This is welcome but the fact that 52% of female directors hold more than one listed board position suggests firms are drawing from a small pool.

MSCI also tracked modest growth, claiming that it could take until 2027 and 2042 to reach 30% and 50% women representation on boards, respectively. Representation varies regionally but not always in the way you’d expect. The percentage of women CEOs in emerging markets firms (5.4%) has overtaken developed markets (5.2%). A fifth of emerging markets firms have female CFOs.

Given the benefits to company performance and the wider economy, what are we waiting for, asked Moody’s. Thirty percent is considered significant because it is the level at which minority voices can reliably be heard. Some firms already intend to go further. Nearly 50% of UK companies and not-for-profits aim to reach gender parity at board level according to a survey by the Chartered Governance Institute.

How do we get there? Voting and engagement helps says BNP Paribas Asset Management, having recently ramped up its opposition at AGMs to board appointments on diversity grounds. Women make up an average of 25% of the boards of the companies in which BNPP AM invests, compared to 18% for the broader universe of listed companies.

It’s harder to engage without the data of course, which is why investors are pushing for more gender-focused disclosure from corporates as part of a wider push to improve scrutiny of social performance metrics. This week’s report on FTSE 100 workplace reporting by the Chartered Institute of Personnel and Development showed how far there is still to go.

Sadly, sometimes you need a crisis to accelerate progress, even to a commonly agreed goal. Russia’s attack on Ukraine is driving plans to reform European energy policy at similar pace at which Covid-19 and the global financial crisis revamped fiscal and monetary policy. Hard choices are easier when the alternative is evidently unpalatable.

Vladimir Putin’s war has also reshaped priorities for investors, with many conducting enhanced due diligence. This comes on top of the efforts of asset owners to meet new reporting requirements, scrutinise green funds, support just transition, integrate nature-based metrics, avoid biodiversity risks and explore opportunities to support climate mitigation and adaptation. If ever there was a need for a diverse talent pool in investment management, this could be it!

Of course, it’s not only in the boardroom that gender equality can deliver more positive outcomes. I don’t know how many female leaders have invaded their neighbours, but I do know how many women are in the Russian cabinet.

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