The TakeAway: Companies that advance gender equality and empower women at the board and C-suite levels gain competitive advantage and increase shareowner value, as well as enhance stakeholder relations.
Although there’s still a long way to go, this year longstanding concerns about the woeful underrepresentation of women on corporate boards put gender equality back on the agenda. Four reports were released in the U.S. and U.K., while a spate of articles and initiatives called for remedial action. Hong Kong was criticized for its aging patriarchs who cling to power, while in Italy, the sex scandal surrounding Italian Premier Silvio Berlusconi drew attention to the board diversity debate: two-thirds of Italian boards are all-male.
In the U.S., momentum comes in part from a new SEC ruling calling for board diversity disclosure. In addition, grassroots efforts to increase women’s presence on corporate boards and in C-suites continue to grow. They include:
- The Leadership Foundry in the Washington, D.C. / Virginia area, seeking to increase women on technology boards based on findings from a report on 172 publicly-traded companies;
- 20/20 Women on Boards, with its goal of 20% female directors by 2020; and
- Pension fund giant CalPERS’ Diverse Director DataSource (3D), for nominating qualified board candidates.
More people support the idea that gender diversity can enhance value by increasing the range of perspectives and experience, which can produce better decisions. Critical mass also plays a key role; a 2006 Wellesley study showed the value of three or more women as board directors. And Andrea Learned, an expert on women in the marketplace, argues in “Gender and the Sustainable Brain” that gender differences in thinking and decision making can enhance sustainability.
Nevertheless, progress remains slow, according to Governance Metrics International’s third annual 2011 Women on Boards Report, a review of 4,200 global companies. Despite the recognized benefits of diversity, forty percent of the world’s largest companies have all-male boards.
Last month, a major UK report (also entitled Women on Boards) warned that British boards are “in crisis” due to underrepresentation of women, and face quotas if they don’t take voluntary steps to double female representation to 25 percent within four years. Among the recommendations of the independent review of a panel led by former Labor Minister Lord Davies:
- Annual disclosure of how many women serve on boards;
- Amend the UK Corporate Governance Code to include board diversity, measurable objectives for implementation, and annual disclosure of progress; and
- A Code of Conduct drawn up by executive search firms for gender diversity and best practice.
Finally, Pax World Investments released a paper entitled Gender Equality as an Investment Concept, written by CEO Joe Keefe. Keefe urged companies to endorse the UNIFEM/Global Compact Women’s Empowerment Principles, and described several ways investors can promote diversity: vote “no” to all-male corporate boards on annual proxies, and use shareholder engagement to promote gender diversity.
If these efforts succeed, perhaps we’ll soon be able to say our governance systems reflect our belief in equality.
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