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The push to improve gender diversity within Australian companies is at risk of stalling because we’re becoming desensitised to the issue, argues AMP Capital in its comprehensive report on gender diversity in corporate Australia.
Gender diversity: the real reason we are still talking about it investigates the drivers of poor gender diversity, why investors should focus on the issue and ways in which gender diversity can be improved. The report also celebrates the successful diversity initiatives undertaken in Australia.
AMP Capital Corporate Governance Manager Karin Halliday said: “AMP Capital has long argued that investors benefit from digging deeper and looking beyond financial statements when valuing companies. If you accept that a company’s value is largely driven by the actions of its people, it follows that teams best able to generate strong returns for shareholders will be those that are happy, engaged, collectively intelligent and also cognitively diverse. Gender diversity is a good place to start but diversity of all forms is important.
“The more analysis I’ve done on gender diversity, the more complex I have found the issue to be. One problem is we’ve been talking about gender diversity for so long that we’re becoming dulled to the issue. Despite the many benefits, we still seem to have an even greater number of reasons, biases and excuses holding us back from addressing it fully. In Australia, you are less likely to be appointed CEO or chairman of a company if you are a woman than if you are a man named Peter, and that has to change.”
AMP Capital has been raising the issue of gender diversity, and monitoring which companies have no women directors, for the last six years. Its analysis has found there is a positive correlation between a company’s governance quality and the number of women directors. When comparing companies with no women directors against those with two or more, AMP Capital found that, on average, companies with better gender diversity have:
- Far fewer issues relating to related party transactions
- Half the number of concerns around board composition including better independence
- Better remuneration in terms of quantum, structure and disclosure.
Within the ASX200, there are still 14 companies that have no women directors. These companies operate in a range of sectors of the economy but the metal and mining sector features most prominently.
Ms Halliday said: “Gender diversity signals something about a company’s culture. When companies appoint more women to their boards, it shows they are sufficiently motivated about getting the best people that they will look beyond the usual pool of male candidates. We have found the companies promoting gender diversity at board level benefit from the different perspectives women bring to the table, and this is why it is important for investors to focus on gender diversity.
“Many male directors tell us that women directors tend to put greater preparation into their attendance at board meetings and after seeing this some men report they are now also reading the papers in more detail. It has also been mentioned that meetings go longer when women are present; the more diverse the opinions and perspectives represented around the board table, the longer and more robust the discussions, which is pleasing to hear as an investor. Boards are also becoming true meritocracies as the white males who have traditionally occupied the majority of board seats now need to compete for roles by proving they are the best person for the job.”
In Australia, there have been a number of initiatives that have positively influenced the trend towards greater gender diversity on boards such as the ASX Corporate Governance Council’s requirements on diversity reporting; the Australian Institute of Company Directors’ mentoring program; the 30% Club, which campaigns for 30 per cent of women on ASX200 boards by 2018; and the Male Champions of Change.
AMP Capital’s report also identifies the top five things that will further improve gender diversity in Australian companies:
- Acknowledge we are part of the problem and the solution.
- Understand our biases and address them.
- Champion benefits of diversity.
- Provide equity opportunities: recruitment, flexible work, support, promotion and pay.
- Set measurable targets and report progress.
Ms Halliday added: “Discussions about gender diversity are often phrased negatively, focusing on what men will lose (for instance, board seats), which is unhelpful. We must continue to talk about how more gender diverse workplaces and boards benefit everyone.
“We encourage the companies AMP Capital invests in to address roadblocks such as unconscious bias and to cast the net more widely when recruiting. For the pool of talented women to be developed and recognised, there needs to be a clear focus on pay parity and the opportunities for women to gain executive experience.”