This International Women’s Day, there are five Australian companies in the S&P/ASX 200 without a single woman sitting at their board table. Another 63 of our largest companies have only one woman in the boardroom.
Across the S&P/ASX 200, women accounted for only 26.7% of S&P/ASX 200 directorships, still frustratingly short of the 30% goal the Australian Institute of Company Directors set in 2015.
Why is this still the case? How can it still be the case when a substantial body of research shows diverse boards and leadership teams lead to better outcomes?
Achieving greater gender diversity is not only about ensuring that daughters have the same opportunities their fathers had, its crucial to the future of good governance in this country. The evidence shows diversity leads to better shareholder and stakeholder outcomes, greater innovation and better bottom lines. Diversity is also crucial in a boardroom setting for combatting groupthink. Put simply, homogenous boards and management teams don’t make better decisions – they just think they do.
While diversity around the board table can take many forms, and we certainly should be looking beyond gender alone, the research is clear that the greatest benefits in this area come from visible diversity – that is to say gender and race.
The Credit Suisse Gender 3000 Report has, over multiple years, reconfirmed the clear link that exists between gender diversity and improved business performance. In the most recent report, the findings were that where women account for the majority in the top management, the businesses show superior sales growth, high cash flow returns on investments and lower leverage.
Importantly, the number of women on a board does make a difference. Research shows that one woman alone does not do enough to achieve the full benefits of diversity and rather that three women, or 30% for most boards, is where the magic happens.
As one piece of Canadian research explained it, “While a lone woman can and often does make substantial contributions… increasing the number of women to three or more enhances the likelihood that women’s voices and ideas are heard and that boardroom dynamics change substantially. No longer does any one woman represent the “woman’s point of view,” because the women express different views and often disagree with each other.”
30% is where the voices of women become heard, rather than just represented, and therefore, where there is true capacity for boards to realise the benefits of diversity. It is the difference between a seat at the table, and a voice at the table.
Despite this, Australia’s boardrooms and C-suites are woefully lacking in diversity.
That is why the AICD has a target of 30% female representation for all boards, and a specific goal for the S&P/ASX 200 to reach that milestone by the end of this year.
While significant progress has been made towards that goal – the percentage of female directors across the S&P/ASX 200 has risen from 8.3% in 2009 to 26.7% today – it’s alarming that so many boards seem content to appoint just one woman to their board. Perhaps these boards incorrectly believe that having a token woman will be enough to have the benefits of diversity without any of the hassle of actually having to have a diverse board.
One of the key excuses circulated for such tokenism is that of supply, the facetious argument that there are just not enough suitable women to fill board vacancies.
However, a 30% Club [1] research report, to be released later this month, highlights that the barrier to achieving gender diversity on boards continues to be not one of supply, but rather of demand, with an insufficient number of boards perceiving gender diversity as a strategic imperative. The investor community can play a powerful role in changing this perception. We saw that with the impact of the Australian Council of Superannuation Investors’ implementation of a voting policy during last year’s AGM season, that had them vote against the re-election of directors of companies with no female directors, or upcoming appointments of female directors. It’s clear that if investors send a message that they want to see greater diversity around the board table, and reap the proven benefits it brings, companies will have to listen.
Elizabeth Proust AO is Chairman of the Australian Institute of Company Directors.
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