Skip to content

27 June, 2022

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categoriess

      • View All
      • Board Moves
    • Man presses plus sign

      News round-up: this week in governance

      Row over pay for non-execs; JD Sports governance overhaul; EU agrees on CSRD; and do...

    • Board members discussing ESG Stakeholder pressure increases urgency on ESG

      Experts say pressure to act on ESG is coming from regulators, investors and a new...

    • A group of diverse job candidates Diversity business case arguments may deter job candidates

      Performance-based and fairness-based arguments confirm that social identities "are a lens through which contributions will...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • Whistleblower in a crowd

      5 reasons for boards to implement a whistleblowing solution

      The right policy and reporting channel for whistleblowing increases awareness and offers protection. But the...

    • White-collar criminal in jail

      Into the mind of white-collar criminals

      It is estimated that high-level fraud costs the global economy over US$5trn every year. What...

    • notebook on boardroom table

      5 topics to improve the effectiveness of your board

      How many board meetings result in real progress for your company? Make sure these discussion...

  • Comment
      • View all
    • Why risk perception is vital

      It is easy to see the tragic situation unfolding in Ukraine in terms of a...

    • Labour leader Sir Keir Starmer Why emotional intelligence is essential for successful leadership

      Cold logic is not a vote winner for politicians or board members. Sir Keir Starmer...

    • Businessman in thinker pose What’s a company for? Milton Friedman responds

      The ongoing lively debate about corporate purpose has caused me to reflect further on the...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Empty boardroom Many executives ‘fail to understand the role and value of boards’

      A recent webinar on board effectiveness discussed the mix of competence and courage required from...

    • Businessman looking at stormy sky Disaster or disruption? Crisis management requires clear definitions

      Identifying and categorising crises, and developing a methodology to deal with them, can help boards...

    • Sir Donald Brydon Sir Donald Brydon on audit reform, career NEDs and board relationships

      While bemoaning the "glacial" pace of audit reform, he hails the pandemic's transformation of communication...

  • Careers
      • View all
      • Selection
      • Board Moves
    • A group of diverse job candidates Diversity business case arguments may deter job candidates

      Performance-based and fairness-based arguments confirm that social identities "are a lens through which contributions will...

    • Directors waiting for an interview Gender diversity warning for FTSE All-Share Index

      Report from Women on Boards and Protiviti reveals half of FTSE All Share companies outside...

    • A group of directors in a boardroom Women take 54% of FTSE 350 board roles but fail to win ‘top jobs’

      Just 19% of chair, chief executive, chief financial officer or senior independent director roles went...

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Stakeholder Engagement: A Roadmap for UK Plc Boards

      This guide aims to provide directors and their colleagues with advice on how to ensure...

    • Board Duties in Ensuring Company Engagement with Affected Stakeholders

      This guidance note gives a brief overview of the role of corporate boards of directors...

    • C-Suite Barometer 2021

      At the end of 2021, Mazars surveyed over 1,000 executives around the world for its...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology
  • Magazine
      • View All
      • Sustainability Works
      • Tomorrow's Leaders
      • Renumeration Tightrope
      • Governance Ascendance
      • Sense In Sustainability
      • Invisible Enemies

Investors want gender diversity on boards—but aren’t sure about targets

by Melanie Adams

While investors are split on the issue of adopting targets, support is growing for taking proactive steps to promote greater board gender diversity.

Woman on arrow heading to the top

Image: Zenzen/Shutterstock

A majority of the world’s institutional investors believe gender diversity on corporate boards is important. But far fewer believe prescriptive targets are the right means for achieving that diversity.

That was a key finding of the RBC Global Asset Management Responsible Investment Survey in each of the past two years.

More than three-quarters of investors in the US, Canada, Europe and Asia said in 2018 that gender diversity on corporate boards was “important to their organisation”. The question changed in 2019, when we asked: “Should gender diversity targets be adopted?”

A slim majority (52%) of the approximately 800 institutional investors surveyed said no to that question. Responses varied by region: 55% of respondents in the US did not favour targets; it was a 50/50 split in Canada; and in Europe 44% of investors surveyed did not support gender diversity targets.

Mandating diversity

While investors are split on the issue of adopting targets, support is growing for taking proactive steps to promote greater board gender diversity.

Some European governments have been more aggressive than the US and Canada in mandating gender diversity on boards. Countries including Norway, France, Italy, Germany and Belgium have established legal quotas.

In Norway, for example, a law passed in 2007 mandates that at least 40% of directors on publicly listed corporate boards be female. France passed a bill in 2011 that also requires 40% female representation by the end of 2016.

Countries including Norway, France, Italy, Germany and Belgium have established legal quotas

Denmark and the UK are among European countries that have adopted voluntary diversity targets. In Denmark, companies are required to report on steps they are taking to achieve gender balance on their boards (at least 40%/60%). In the UK, a 2011 government commission put forth a non-binding call for companies to have at least 25% female representation on their boards by 2015.

In May 2018 Canada passed a new law that will require any company that is a “distributing corporation” under the Canada Business Corporations Act (CBCA) to provide shareholders with information on its policies for diversity on the board and in senior management, including women and minority groups. This applies to the more than 700 distributing or publicly held corporations of the 235,000 companies incorporated under the CBCA.

This comes after the Ontario Securities Commission introduced a comply-or-explain rule in 2015 that requires most companies listed on the Toronto Stock Exchange to disclose the number of women on their boards and in executive officer positions annually and to disclose whether the company has a policy for identifying and nominating women directors, and if not, to explain why.

In the US, a California law requiring that public companies have at least one female director has prompted Illinois, New York, New Jersey and Washington to consider similar board gender diversity rules.

Global trends

Recent studies on board diversity in the three regions surveyed by RBC GAM—Europe, North America and Asia—appear to illustrate the relatively slow pace of market-based reforms in countries without statutory targets.

In Canada, women held about 15% of board seats as of 2018, up from 11% in 2015, according to a report from Canadian Securities Administrators, which also found that about 66% of companies had at least one woman on their board.

France has nearly achieved gender parity, with 44% of corporate board seats held by women—the highest ratio in Europe

In the US, 24% of board directors on S&P 500 companies were women, up from 18% in 2013, according to data from consultancy KPMG. Last year (2019) was the first in which every S&P 500 company had at least one woman on its board, while six now have majority-female boards.

France, on the other hand, has nearly achieved gender parity, with 44% of corporate board seats held by women—the highest ratio in Europe, according to an index released by the group European Women on Boards. Italy and Germany are above 33%.

European Women on Boards is among many groups that have played a part in pushing for greater diversity in boardrooms around the world. The 30% Club, which argues that more diverse boards lead to better corporate performance, has chapters across the globe—including in Canada, the US and the UK.

Diversity and performance

RBC GAM is a member of the 30% Club Investor Group in Canada, reflecting our view that gender diversity in corporate boardrooms brings benefits to the financial bottom line, while also positively impacting such issues as governance and sustainability.

For example, a research paper by MSCI found that companies with fewer women on their boards had a higher-than-average number of governance-related controversies. At the same time, more gender-diverse boards had fewer instances of fraud.

A more diverse board has also been linked to better performance on other environmental, social and governance (ESG) factors. For example, a more diverse board tends to increase the likelihood of voluntary climate change disclosure, according to research published in the Journal of Business Ethics in 2017.

With some companies taking action on their own and many others responding to outside forces, gender diversity on boards is gaining momentum. But given the overwhelming evidence that board diversity is good for business, it’s not coming fast enough.

Melanie Adams is vice president and head of corporate governance and responsible investment for RBC Global Asset Management.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • S&P 500 falls short on gender diversity
    June 15, 2016

    Research reveals that S&P 500 boardrooms remain male bastions with few on a path to gender parity.

  • LGIM launches gender diversity fund to promote women on boards
    May 18, 2018
    women in business, gender pay gap, gender diversity, equal pay

    Asset manager LGIM will track the score of 350 UK companies for a new fund focused on promoting improved gender diversity standards.

  • Practical steps needed to boost gender diversity on US boards
    May 21, 2019
    CEO looking out of office window

    Campaign group Women Corporate Directors has published a list of practical recommendations aimed at increasing the number of women in boardrooms—and accelerating what it terms the "glacial pace" of change in the US.

  • Guidance on board diversity issued
    December 9, 2016
    diversity, BAME

    ICGN publishes guidance on diversity that looks beyond gender.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

30% Club, Board composition, board diversity, gender diversity, Melanie Adams, non-financial disclosures, RBC, selection, talent pipeline

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us


 

 

 

 

Most Popular

  • Stakeholder pressure increases urgency on ESG
  • IoD calls for voluntary code of conduct for board directors
  • News round-up: this week in governance
  • 5 reasons for boards to implement a whistleblowing solution
  • Why risk perception is vital

 


 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

Board Transformation 2021: Leadership in Transition

There can be little doubt that the global Covid-19...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
EQ 2021 AGM Season report

2021 AGM Season: Successful AGMs in the Pandemic and Beyond

With the impacts of Covid-19 hitting just as the s...
Leadership in AI report

Leadership in AI 2021

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

Global Business Complexity Index 2021

The Global Business Complexity Index 2021 provides...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|