Market could drive government gender diversity quotas
In a compelling speech to the inaugural International Women’s Day lunch presented by Associations Forum and Governance Institute of Australia, Governance Institute President Ms Trisha Mok warned that if Australian boards, particularly those in the shareholder-rich ASX200, continue to under-perform on the issue of gender diversity, the market will have no choice but to resort to government to introduce quotas to force change.
Ms Mok pointed to the world’s largest fund manager, Blackrock, which considers gender diversity to be such an important factor in predicting investment performance that it conducts an annual study into the diversity disclosures of the ASX200.
Blackrock’s latest report for the 2014 year — while showing some improvement particularly at board level (21 per cent of women in non-executive director roles and 10 per cent in key management personnel roles) — clearly demonstrates that a commitment to gender diversity is not in Australia’s corporate ‘DNA’. In addition, the report noted that the overall standard of diversity disclosures, even in the ASX200, was ‘perfunctory’ at best.
“As was expressed by a major institutional investor: ‘If they are missing this, what else is the board missing?’ That question is unlikely to go away. Which means that the debate on quotas is unlikely to go away, if corporate Australia doesn’t lift its game on gender diversity,” Ms Mok added.
Many European countries are imposing quotas to prescribe the proportion of women on boards. Norway, Belgium, Iceland, Italy, the Netherlands, Spain and France have all embraced legislative quotas. The UK government has also raised the prospect of quotas if companies do not appoint more female directors voluntarily.
“And while quotas might not be on the current government’s agenda, that does not mean it won’t be a priority for future governments. Investors are already pushing boards on targets, and will push for quotas if there is inaction,” Ms Mok added.
Recently, the Australian Council of Superannuation Investors (ACSI), which represents superannuation funds owning about 10 per cent of ASX200 companies, announced that it aims to have women make up 30 per cent of board members in the companies in which they have a significant interest.
ACSI’s CEO, Gordon Hagart commented that, ‘Having one woman on your board is not, however, ‘job done’. And having no women on your board leaves ACSI, and its members, wondering about the fitness of company chairs that have not yet been able to find an appropriately skilled woman to appoint. What else might they have missed in their role?”
“The reality is that failure of voluntary action to deliver gender balance on boards within a practicable timeframe could be a wake-up call for stronger measures,” Ms Mok concluded.
For further information contact Viv Hardy or SuLin Ho at CallidusPR on (020 9283 4113) or Trisha Mok on 0404 891 742.
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