One particular problem the recent Snap IPO news brought to light yet again is how few women sit on the boards of directors of major public companies. This, in light of the fact that recent findings from MSCI ESG, a global research firm, indicate that companies with strong female representation on boards generated a Return on Equity of 10.1% per year versus 7.4% for those without.
How is this playing out on a global scale? Egon Zehnder, an executive search firm, has been studying the progress (or lack thereof) of board diversity for 12 years. Its latest Global Board Diversity Analysis (GDBA) reveals that there have been incremental gains worldwide. In 2016, for example, almost 19% of seats on the boards of the largest companies in the world were held by women. That’s an increase of nearly 5% since 2012. The GDBA’s authors say this is due to countries making gender diversity a priority.
The data also reveals that most Western European countries, Canada, and South Africa have better representation than the U.S. The analysts find that the U.S. progress has stagnated for the last four years, falling short of having at least two women per board.
Japan is one of 11 countries out of the 44 studied where more than half of the boards have no female representation at all. But a majority (77%) of countries do not have a minimum of three women per board, including Russia and Brazil.
Countries with boards that became less diverse include China, Mexico, Taiwan, Czech Republic, and Turkey. The analysts chalk this up to “stagnation or situations where social, economic, or political headwinds make it difficult to achieve gender diversity on a broader scale, let alone in the boardroom.”
The analysts note that diversity is often led by a board chair. “When diversity is a priority at the top, it will trickle down to board representation, board behavior, and overall mind-set,” they write. But there hasn’t been any progress toward women getting into those roles worldwide. The report found that men are in 95% of those positions.
Countries that have made the most inroads to women in leadership, not surprisingly, have the highest number of female CEOs and CFOs, such as Sweden. At 29%, Norway boasts the highest percentage of women holding executive and non-executive chair positions. Italy comes in a close second with 27%.
On a positive note, the analysts cite Italian and French company boards as “transformed” by government-enforced quotas that were passed in 2011. Italy’s companies have increased their female board representation from 8% to 32%. In France, the shift went from 21% to 38%.
Norway was the first to introduce the concept of board diversity quotas in 2003, and nine countries in this report have instituted some type of government mandate for a target percentage–-usually between 20% to 40%.
“If progress continues at the rate we’ve seen globally over the last two years (1.6% per year),” the analysts write, “the average number of women per board will reach three by 2021, while gender parity remains 20 years away.” Still, they point out, it would be too early to declare a win in four years, because most of the countries that need to make the target are in the developing world.
“A significant share of the female population is still living in countries where the diversity ambition is not yet prioritized,” they observe, “and these regions are decades away from reaching this critical target.”