International Women’s Day: Board diversity is improving

International Women's Day

Data released by the UK government to mark International Women’s Day this week (8th March) revealed record numbers of women are on boards of FTSE 100 companies.

These figures show 309 positions – almost 29% – of FTSE100 board positions are held by women, up from 12.5% in 2011. In FTSE 350 companies, the number of women chairs has risen from 17 to 20 while the number of women on boards has increased to 25.2%.

International Women's day
More women are being appointed to UK boards

Looking forward the government said that if progress matched the same gains made over the last three years then a third of board positions would be filled by women by 2020 – the target set by the Hampton-Alexander Review.

Business Minister Andrew Griffiths said: “International Women’s Day is about celebrating women’s achievements and I am delighted to see that a record number of our largest companies’ board positions are now filled by women.

There has been a lot of progress in recent years with high-flying women breaking down barriers to more than double the number of women on FTSE 100 boards but there is still a lot more to do to ensure that women are not held back in the workplace.”

Separately under new laws, over 1,400 companies have reported their gender pay gaps revealing an overall pay gap of 18.4%. All companies with more than 250 employees must report their gender pay gaps by April 4.

State Street: International board diversity has improved

Fund manager, State Street Global Advisors, which last year just before International Women’s Day, erected a statue of a girl in Wall Street New York, the heart of the US financial centre, entitled the “Fearless Woman”  to highlight the lack of gender diversity on company boards has announced progress a year on.

State Street said that since last March it had engaged with over 700 companies in the US, UK and Australia that did not have a single woman on their boards and 152 of those firms had now appointed female directors and 34 more had pledged to now appoint a woman to their board. Last year State Street said it voted against 500 companies that had not taken action to appoint a female director.

This year State Street said it would be extending its engagement programme to companies in Canada and Japan.

Meanwhile, the Australian Council of Superannuation Investors (ACSI) made their own demands for listed Australian companies to improve their board gender diversity.

In 2017, the ASCI implemented a gender diversity voting policy to support its target for women to comprise 30% of ASX200 board seats. The policy stated that it would recommend against the election of directors on companies with poor board gender diversity. During the last annual general meeting season, the ASCI said its saw clear evidence that its policy was focusing companies on the need to consider board gender diversity. This year, the ASCI said it planned to publish a revised policy which would include new incentives for companies to meet its 30% target.

In Canada, the Shareholder Association for Research and Education (SHARE) found that publicly-listed companies incorporated under the Alberta Business Corporations Act continued to lag on board and executive gender diversity compared to companies incorporated elsewhere in the country.

SHARE’s research found that the percentage of Alberta-incorporated companies on the TSX Composite Index with all-male boards (25%) was almost triple the rate (9.2%) of the remaining companies on the TSX Composite Index last year. While the average percentage of board seats held by women at Alberta companies did improve slightly between 2016 and 2017, the gap between Alberta companies and the rest of the TSX Composite Index grew larger when it comes to board seats held by women. SHARE also found that the average percentage of executive positions held by women at Alberta-incorporated companies actually declined between 2016 and 2017, while the rest of the TSX Composite companies reported improvements.

Shareholders of companies registered in the rest of Canada and in the US have been filing shareholder resolutions calling on their companies to address the gender leadership gap. Last year SHARE, on behalf of shareholders, said it filed four proposals at TSX companies with no women on their boards of directors. Three have since appointed women to their boards. In the US 35 proposals on board race and gender diversity were filed in 2017, nine went to vote. However, in Alberta regulatory impediments effectively prevent most shareholders from filing resolutions with Alberta-incorporated companies for vote at the company’s annual meeting SHARE said. No gender diversity proposals have ever been filed or voted with Alberta-incorporated companies it added.

Institutional investors Pax and Mercy Investment Services (Mercy) have announced the success of their engagement with US Foods after filing a resolution last November calling for the company to enhance its current disclosures on board diversity and to provide investors with a better understanding of the company’s commitment to diversity on its board.

Having had no female directors on its board US Foods appointed  Ann Ziegler in January 2018.  The company amended its corporate governance guidelines to state that they would actively seek out highly qualified women and individuals from minority groups, as well as candidates with diverse or non-traditional backgrounds, skills and experiences as part of the director search process. The company also agreed to include similar language in its 2018 proxy statement and to include board diversity as part of the board’s annual self-assessment process.

The institutional investors have now withdrawn their resolution and welcomed the changes made by US Foods. Over the last six years, Pax has filed board diversity proposals at nine companies, urging them to adopt gender diversity policies for their boards. Seven of the nine companies, including Cognizant Technology Solutions, Stericycle, and eBay, have since announced female director appointments.

Accenture: A culture of equality unlocks human potential

Research by advisory firm Accenture has identified 40 factors that are statistically shown to influence advancement, including 14 that are most likely to effect change and found that when these factors are the most common in a workplace, women are four times more likely to reach senior manager and director levels.

Accenture surveyed more than 22,000 working men and women with a university education in 34 countries to measure their perception of factors that contribute to the culture in which they work. The firm has grouped the positive factors into three categories: bold leadership, comprehensive action and an empowering environment.

If the factors are adopted by companies Accenture believes globally, for every 100 male managers, there could be
up to 84 female managers, compared with the current ratio of 100 to 34. Meanwhile, women’s pay could increase by 51 percent, or up to an additional US$30,000 per woman each year. Globally, that would equate to a lift in women’s earnings of US$2.9 trillion Accenture said.

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