The Australian Institute of Company Directors (AICD) is warning that progress has stalled in achieving the target of having 30% female representation across ASX 200 boards.
In the latest AICD Quarterly Gender Diversity Report, at the end of August, there were only 25.4% women appointed directors across the ASX 200, as compared to 25.3% at the end of 2016.
“We are concerned that the rate of new appointments to ASX200 boards does appear to have stalled, but we recognise that the boards of our largest companies have made incredible progress in less than a decade,” said Louise Petschler, general manager, advocacy at AICD. “The levels have progressed dramatically from just over 8% in 2009 to 25% now, so that’s a really positive sign. But we are concerned when we look at the appointment rate in 2017, coming up to this AGM season. At this level of activity, we won’t reach the 2018 target. That’s the basis of our call to action. It’s quite strong action – a wake up call for the boards, for directors, for chairs, for investors, we need to see a bit of a turn of the dial to get that trajectory/momentum back.”
Petschler noted that progress is happening quickly – since 31 August, the list of ASX-listed companies with no women on boards has shrunk from 11 to seven, with Qube Holdings, CIMIC Holdings, Evolution Mining, and Mineral Resources Limited announcing that they would put appointments of female candidates to their AGM.
The remaining seven companies with no women on board are: TPG Telecom, Reliance Worldwide, ARB Corporation, Australian Agricultural Company, Flight Centre Travel Group, Speedcast International and Investa Office Fund.
“It’s clearly becoming less acceptable to have no women on boards – there are less than 10 companies represented in the ASX 200 with no women,” Petschler said. “Our attention is turning to the largest group of companies in the ASX 200 which only have one woman director.”
There are 64 boards with only one woman director, while research shows that a critical mass – defined as 30% – is needed to achieve the benefits of diversity on boards.
“We believe that there is a deep pool of talented, experienced and women in the Australian business community that are ASX 200 board ready,” Petschler said. “We are optimistic. If we saw a significant portion of those 64 companies proactively thinking about the skills they need with the greater gender diversity on the board by finding a woman with that skill set, they won’t struggle to find the skill set they need.”
AICD is also calling on stakeholders including investors and investor groups to engage with boards on the issue. The Australian Council of Superannuation Investors (ACSI) has codified a policy whereby companies without female directors will face votes against sitting directors in the 2017 AGM season.
“The willingness of investor activist and investor originations like ACSI will be influential, we believe, in exercising the voting power around the importance of gender diversity,” Petschler said. “That definitely will cause boards to sit up and pay attention. Give that the biz case is so strong, we expect that investors, in terms of a market response, that’s really the most significant shift from here in terms of what’s going to turn the dial.”
AICD warned that without proactive appointments by boards, quotas and regulation may follow.
“From AICD’s point of view, the best outcome is to see businesses and boards embracing the benefits of gender diversity on a voluntary basis,” Petschler said. “If we can’t, as a business community, achieve the 30% target, the conversation turns to more proscriptive, regulated answers, which is not ideal.”