Good news for ASX300, but Australia not achieving the gold standard

The report, "Board Diversity Index 2021" (not to be confused with the WOB Board Diversity Index) by Watermark Search International and Governance Institute of Australia (GIA), reviewed the composition of more than 2,000 board seats on the ASX300 for gender diversity, cultural background, skills, age, tenure and independence.

It found that women are studying harder to reach the boardroom, outstripping men in virtually every category of qualifications, and are younger than their male counterparts.

This echoes the experience of Norway when it legislated gender quotas for its Public Listed Companies in 2003 and set a mandatory deadline for compliance in 2008.

Svein Rennemo, chair of Statoil, was one of the many international chairs, directors and CEOs I interviewed as part of my Churchill Fellowship in 2011. He told me there were some very positive outcomes of mandating gender balance on boards; including younger, better educated, more engaged directors from more diverse backgrounds in general. This was supported by others - including Sir Phillip Hampton, who had just been appointed as Chair of RBS (Royal Bank of Scotland) who told me:  “There is not a shattering absence of women...I am relaxed if there is a quota, it’s the wrong thing to do, but the reason I don’t mind (say) a 25% quota is that it’s achievable and not a major burden.”

The question we need to ask in Australia is how long are we prepared to wait to get to 40%? A recent Australian Gender Equality Council report showed we are still 7% shy of 40% female representation on ASX200 boards. The fact that we did it without quotas simply means that it is taking us longer to reach the gold standard. In the case of ASX200 companies it took 12 years to move from 8% to 33%, whereas in Norway it took two years after the compliance deadline in 2008 reach 40% of the under-represented gender on listed boards.

WOB invited Arni Hole, Director General of the Ministry of Children, Equality and Social Inclusion in Norway, and the public official responsible for bringing in the quota system in Norway to Australia for our 2nd Conference in 2009.

One of her most insightful comments, and one that I often use, was that introducing quotas forced the Chairs and nominations committees for Norwegian PLCs to "turn off the spotlight and turn on the floodlight" when it came to looking for directors. In other words, to look outside their existing circles and connections when it came to finding board members.

While search firms such as Watermark have been at the forefront of finding and nominating skilled and experienced women for boards, there is still an element of not appointing outside the club for listed companies. For many men and women it means breaking into the 'director club' is the hard work.

The Watermark / GIA report tells us some good news;

• There has been an almost 60% increase in the number of ASX300 board seats occupied by women in the last five years (633 in 2021, up from 399 in 2016).
• The number of ASX300 companies without any female board members has decreased from 59 in 2016 to 14 in 2021.
• On this current trajectory there will be no ASX300 companies without a female director by 2026.

However, the percentage of women on boards in the ASX top 500 companies by market capitalisation as measured by Open Director as at 30 June 2021 is 27%. If you remove the ASX300 the percentage falls to 20% female directors. Half of the desired 40%.

The Board Diversity Index 2021 report also found:

• Cultural change in the boardroom is moving slowly, with 90% of directors of Anglo-Celtic or European background.
• Based on current trends, it will take 18 years for the boardroom to be reflective of Australia’s cultural diversity.
• Directors with skills and experience in technology, healthcare and property are starting to entrench themselves at board level.
• Accounting and financial skills, while still the most prevalent, have decreased from 39% to 34.4% among board members.
• Around 65% of directors and 72.5% of chairs have tenures less than 10 years. It has become quite rare (2.9%) for a director to serve more than 14 years on the same board. Longevity on boards is more closely correlated with men than women.