Deloitte Global’s latest Women in the Boardroom report highlights slow progress for gender diversity
Deloitte Global’s sixth edition of Women in the Boardroom: A Global Perspective reports that women hold just 16.9 per cent of board seats globally, a 1.9 per cent increase from the report’s last edition published in 2017. The numbers underscore a now-familiar challenge: women are largely under-represented on corporate boards, and progress to change this trend continues to be slow.
“If the global trend continues at its current rate of an approximately 1 per cent increase of women on boards per year, we will be waiting more than 30 years to achieve global gender parity at the board level. Even then, actual parity is likely to be concentrated to the few countries that are currently making concerted efforts to overcome this issue, leaving several regions lagging behind,” says Sharon Thorne, Deloitte Global Board Chair.
“Our report throws into sharp relief the progress and lack of progress countries around the world are making to increase the gender diversity of their boardrooms. For example, some countries, particularly in Europe and Australia, are showing real momentum. Yet, others continue to have very low rates of women serving on their boards. While the global average posted a small uptick, only six countries in the world can claim an average above 30 per cent. These statistics illustrate an urgent need for organisations to take action to drive more positive and dramatic change.” says Dan Konigsburg, Senior Managing Director, Deloitte’s Global Center for Corporate Governance.
Studies have repeatedly shown that increasing diversity is not only the right thing to do for an organisation’s culture, it also leads to better business outcomes. Increased diversity leads to smarter decision-making, contributes to an organisation’s bottom line, and powers innovation, among other benefits.
“The benefits of diversity extend beyond the four walls of any single corporation. The trickle-down effect of women in the boardroom, such as breaking down stereotypes, encouraging girls and young women to pursue careers traditionally dominated by men, and breaking down the wage gap are all important steps along the way to greater economic opportunity for women and to more inclusive workforces and societies,” continues Konigsburg.
Yet barriers to gender diversity in the boardroom, and more broadly throughout the workplace, persist. Outdated workplace cultures, unconscious bias, and lack of sponsorship are just a few of the factors which prevent many women from reaching senior leadership roles. Women hold just 4.4 per cent of CEO positions globally. CFO positions are nearly three times more diverse, but women still hold just 12.7 per cent of these positions globally. Given that many board members are recruited from the executive level, this also contributes to a shortage of women in the boardroom.
“It is critical we take tangible, meaningful action now—or gender parity will remain an elusive goal rather than an enabler of inclusive economic growth,” Thorne added. “Based on our own experience, there are a number of actions that chairs, boards and executives can put in place today to accelerate progress. This includes setting the tone from the top—making gender parity a priority throughout the entire organisation and holding leadership accountable to make progress. I have seen firsthand that it’s possible to speed up the rate of change. Representation on Deloitte Global’s Board jumped to 30 per cent in 2019 from 16 per cent the previous year, following structural changes and a concerted effort to ensure some of our highly talented women were given the opportunity. While I’m immensely proud of this progress, I know we still need to do more to move the needle and demonstrate our commitment through concrete actions.”
Asia trails global trend in gender diversity
While gender diversity is improving across businesses in Asia, it trails behind the global trend. In Asia, women hold 9.3 per cent of board seats, a 1.5 per cent increase from 2016, albeit behind the trend of 16.9 per cent women in board seats worldwide. Women also fill 4.2 perc ent of board chair positions in Asia, a 1.6 per cent increase from 2016, but trails 5.3 per cent of board chair positions held by women globally.
“In Malaysia, certain biases are still prevalent in the organisations and one real example is the assumption that men and women have the same career trajectories and opportunities. In the past, women in Malaysia were expected to focus on their families, instead of being a member of the business community. Hence, when considering the talent pipeline, there is a higher fallout rate for women in business and the talent pool is generally skewed to men. We see some shifting of trends in the direction which supports women and we should work together to make sure women stay connected and contribute their unique talents to the business community” says Cheryl Khor (pic), Operational Risk Leader, Deloitte Asia Pacific, Corporate Governance Leader, Deloitte Malaysia.
There are encouraging signs, however, that businesses in Asia value the benefits of having women on their boards. The average tenure of women as board members in Asia is 5.6 years, above the global average of 5.5 years. Women holding board chairs in Asia average a tenure of 8.0 years, compared to 5.4 years globally. The average age of women serving as board members and chairs in Asia are 57.0 and 57.1 respectively, on par with the global average of 57.0 years for board members and below the global average of 59.4 years for board chairs.
In Malaysia, the government has adopted a 30 per cent target for women in company leadership and decision-making positions in 2011, calling for 30 per cent representation of women on board by 2020.
“While the progress to hit 30 per cent is still ongoing amongst public-listed companies in Malaysia, it is great to see consistent efforts being made by the government through the Malaysian Code on Corporate Governance. We are hopeful that in a year, the majority of the women holding senior leadership or management roles will get to break the glass ceiling” says Khor.
Deloitte Global’s Women in the Boardroom report shares the latest statistics on global boardroom diversity, exploring the efforts of 66 countries to increase gender diversity in their boardrooms and features insights on the political, social, and legislative trends behind the numbers.
More key findings from the research include:
In countries with the highest or fastest growing boardroom gender diversity, data reveals there is no one-size-fits-all solution
– Our data shows six countries that have over 30 per cent women on boards—Norway, France, Sweden, Finland, New Zealand, and Belgium. Three of these six have implemented gender quota legislation, while the other half have addressed diversity efforts without gender quotas.
o Norway, with 41 per cent women on boards, was the first country to enact a gender quota legislation (a 40 percent quota) in 2005.
o France, with 37 per cent women on boards, also has a 40 per cent gender quota which became effective in 2017.
o Belgium, with 30 per cent women on boards, has a gender quota which requires at least a one-third representation of each gender on the board.
o Sweden, Finland and New Zealand have not implemented gender quotas, instead addressing diversity efforts through self-regulation and/or corporate governance code recommendations.
– Australia, Germany, Malaysia, Finland, and South Africa all increased their boardroom gender diversity by five to seven per cent since the report’s last edition. And again, there is a split between countries with gender quota legislation and those without.
o Germany saw a 6.7 per cent increase which is likely linked to recent gender quota legislation passed in 2015.
o Finland saw a 7.2 per cent increase through corporate governance code recommendations and the encouragement of career development programs for women.
o Malaysia saw a 6.9 per cent increase after implementing a series of targets for women in leadership positions, as well as through corporate governance code recommendations.
o South Africa also saw a 6.9 per cent increase after implementing recommendations for listed companies to disclose targets for gender and race representation at the board level.
o Similarly, Australia, which saw a 5 per cent increase, has a recommendation that listed companies establish and disclose board diversity policies, as well as voluntary targets for gender representation on boards.
Progress across EMEA varies widely
– Europe is home to five of the six countries with the highest boardroom gender diversity in the world, while other European countries have more than 20 per cent women on boards and continue to advance boardroom diversity slowly.
– In the UK, 22.7 per cent of board seats are held by women. While there are no quotas in place, significant efforts have been put in place to advance efforts such as the 2011 Davies Review target which called for FTSE100 companies to have at least 25 per cent women on boards by 2015, which was achieved. The report’s successor was launched in 2016 with a target of 33 per cent representation of women on boards by the end of 2020.
– Most of the Middle East region has very low representation of women in the boardroom. Some efforts have been put in place to address the challenge such as the United Arab Emirates’ 2012 rule requiring all corporations and government agencies to include women on their boards of directors and Saudi Arabia’s 2030 vision which aims to increase women’s participation in the workforce.
Boardroom diversity across the Americas rising slowly
– In the US, 17.6 per cent of board seats are held by women, up from 14.2 per cent two years ago. While there are no national quotas for women on boards, state measures have been passed to help increase women’s representation on boards. This includes a measure in California, which became the first state to require specified numbers of female directors on the boards of public companies. The law has drawn criticism and a lawsuit was filed in August 2019 challenging the law as unconstitutional.
– The percentage of board seats held by women in Canada grew to 21.4 per cent, a 3.7 percentage point increase since 2017.
– In Latin and South America, only 7.9 per cent of board seats are held by women.
About Women in the Boardroom: A Global Perspective
On behalf of Deloitte Global, MSCI ESG Research Inc. collected boardroom diversity data covering nearly 8,648 companies in 49 countries spanning Asia Pacific, the Americas, and EMEA. The data was collected as of 15 December 2018. Based on this data, the Women in the Boardroom publication includes global, regional and country analysis of the progress made towards greater board diversity. It also includes a breakdown of how well women are represented in boardrooms across 6 key industries—financial services; consumer business; technology; media, and telecommunications; manufacturing; life sciences and health care; and energy and resources. To supplement this data, Deloitte Global compiled information about diversity quotas and other board diversity initiatives from 17 additional countries. So, in total, the publication explores the efforts of 66 countries to promote boardroom gender diversity. Finally, interviews were conducted with 3 directors from Australia, the United States, and Spain to provide editorial perspective about the publication findings and additional insight into how boardroom diversity is progressing in their parts of the world.