Crunch time for women on boards

Forcing companies to comply with gender diversity goals appears to gaining the upper hand globally.

Despite news from London that women now hold more than a quarter of the board seats of major UK companies, the European Commission looks set to move ahead and introduce a mandatory quota of 40 per cent representation for each gender in non-executive board positions. This would affect up to 5000 public companies across the EU.

But the argument between those who advocate introducing diversity targets, as they have successfully done in the UK, and those who want to whole process switched to a quotas system is far from over.

According to the London report, an analysis of nearly 6000 companies across 45 countries by GMI Ratings in 2013 showed that quotas had made a clear impact in countries where they have been adopted.

“In France, where it became mandatory in 2014 for a fifth of board directors to be female, the number of women directors rose in 2013 to just over 18 per cent. In Italy, the proportion of women on boards rose by nearly 4 percentage points between 2011 and 2013, after Italy adopted a law requiring 20 per cent female representation in new board nominees. In the Nordics, women now account for nearly a third of seats on all corporate boards. “

Norway passed a law in 2003 mandating 40 per cent of each gender on the board of public companies. This reform was designed both to increase the representation of women in top positions and decrease gender disparities in earnings.

So if you’re wondering what’s the situation Down Under the Australian Institute of Directors quotes the following data as at June 30:

• The latest percentage of women on ASX 200 boards is 20.0 per cent
• The percentage of women on boards of ASX 200 companies and the proportion of women comprising new appointments increased significantly in 2010, 2011, 2012 and 2013
• A total of 30 boards in the ASX 200 still do not have any women.
• The latest percentage of women on ASX All Ordinaries companies is 15.5 per cent
• Women have comprised 26 per cent of new appointments to ASX 300 boards to date in 2015.
• A total of 184 boards in the All Ords still do not have any women.

A large number of major Australian companies are committed to following Norway’s lead and want to see 40 per cent gender diversity on boards, and generally throughout their corporation, within the next decade.

But this is very much a wish list for some companies, as can be seen by the 30 top companies that have no women on their boards. Of course as Data News has pointed out recently there is a collation between the lack of gender diversity and the large discrepancy in women’s’ pay compared to their male counterparts.

The argument has always been that the number of increasingly well-educated women entering the workplace will force change from the bottom up. This doesn’t seem to be happening fast enough and the quota system might just be needed to make sure change happens from the top down.

But another problem that’s been noted by dbdata analysts when looking at the elite directors listings is that Australian boards are still quite conservative and tend to target women with previous board experience – they’re fishing out of the same pool – which in the end could become embarrassing and self-defeating when they have to explain their gender diversity policy to shareholders

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