When the Australian chapter of the 30% Club launched in May 2015, I was hopeful we could reach a target of 30 per cent female directors on ASX 200 boards by the end of 2018. But today, with just under 18 months left to achieve our target, I am deeply concerned that we are not on track to make it.
The 30% Club is a movement with proven success at increasing the number of women on boards in the United Kingdom and I was certain it could do the same here, especially given the strong advocacy and direct support of the Australian Institute of Company Directors.
Our calculations showed we needed only to lift the running rate of appointment from 30 per cent women to 40 per cent and we’d easily get to 30 per cent total women on boards by 2018. That didn’t seem so hard, just a dial-up in the appointment rate from one woman for every two men,
to two women for every five men.
In Australia, 2016 was a great year for female appointments, with the average monthly rate right on target at about 40 per cent. Unfortunately, 2017 has been a disappointment so far. We are struggling, with the running rate languishing at 33 per cent and only 15 female appointments to ASX 200 boards over the first third of the year.
As a non-executive director of several companies and as the chair of the Commonwealth Superannuation Corporation, it is my duty to ensure that I and my fellow directors are focused on sustainable long-term wealth creation.
The time is now
Over the 20-plus years I’ve served as a listed company director, we’ve come a long way. In some ways, Australia is now a paragon of virtue in terms of corporate governance and stewardship, compared with international markets. So I think it’s time for the beneficial owners of our largest listed companies to begin to flex their muscle on the diversity agenda to advocate for meaningful and sustainable change.
There is a great deal of research proving the benefits of diversity – whether it’s by gender, race, age, background or experience – and its contribution to increased company performance. There is equally compelling research regarding the dangers of group think and employing individuals with the same frames of reference and viewpoints.
Unfortunately, many players in the equity markets focus insanely on the short term. Prime time news every night gives daily share price movements, as if individual investors should be day traders. Super funds still obsess about short-term performance. How can this be congruent with long-term stewardship?
For our portfolio companies to compete globally, we need diverse individuals sitting around their board tables, challenging management and one another to perform at a higher standard. Diversity, of course, is about more than gender, but how can we achieve diversity in a broader sense when our top boardrooms bear no resemblance to 50 per cent of the population?
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I urge all directors to consider their selection and appointment processes carefully to ensure they are appointing diverse directors who bring unique skills to their boards. Company directors should ask their recruitment advisers what their success rate is in appointing women to boards and get the data in fine detail.
I also call on investors to have difficult conversations with those boards that don’t exhibit gender diversity and ensure these directors understand that their institutional backers are focused on long-term performance.
Investors can also show their support by signing onto the 30% Club’s statement of intent, pledging their support for discussing gender diversity in their engagement with chairs and non-executive directors.
We all have a role to play to make sure our largest listed companies are performing to the best of their ability and incorporating the abundant female talent that is available to them.
Patricia Cross is chair of the Australian chapter of the 30% Club. She is also chair of Commonwealth Superannuation Corporation and a non-executive director of Macquarie Group and Aviva.