US Trails European Countries in Women on Boards, Diversity Efforts
By The Glasshammer Staff
According to Catalyst’s board census for 2014, women how hold 19.2 percent of all seats on S&P 500 boards. The U.S. numbers look similar to those in Canada, where women hold 20.8 percent of board seats at companies on the S&P / TSX 60 index.
But in many parts of Europe, the percentage of women on boards has surpassed the numbers in North America that Catalyst reported. Norway has the highest percentage of women on boards of public countries at 35.5 percent, a result of the country’s 2003 quota law that threatens to delist companies whose boards are less than 40% female.
Finland came in at 29.9%, France at 29.7%, Sweden at 28.8%, and Belgium at 23.4%. The UK followed Belgium at 22.8%.
“It’s exciting to have this global comparison, but I think one thing we can see is almost all across the board, there’s still quite a bit of work to do in terms of women in business leadership,” says Brande Stellings, vice president of corporate board services at Catalyst.
“Think about the talent pool in terms of who’s getting higher degrees. [Think about] who the consumers are buying the products. The leadership at most companies is not reflective of the talent pool or customer base,” she adds.
While the numbers seem to be improving around the world, the pace of change is glacial. Companies will have to make a more concerted effort to diversify their boards. Luckily, Stellings says, as more women flow into the upper echelons of business leadership, they can influence boardroom diversity at their companies.
Global Mechanisms for Change
According to Catalyst, boardroom diversity may be contagious across borders. After Norway passed its legislation to increase the number of women on boards, other countries followed suit (although with less strict versions of the law). For example, France passed a law in 2011 requiring boards of listed companies to be 40% female within 6 years. Belgium, Iceland, Italy, the Netherlands, and Spain have also implemented quota systems.
Meanwhile, the UK has no official law on boardroom gender diversity, but lawmakers have threatened quotas if numbers don’t improve. The business community has also made a push for increasing the percentage of women on boards. While the numbers in the UK aren’t as high as they are in some of the countries with legal quotas, it has increased dramatically in the UK over the past 5 years. In 2010, the number of women on boards at FTSE 100 companies was only 12.5% and now it has almost doubled.
“We know there are many different ways to make your board more diverse – legislative, regulatory, voluntary efforts – and that conversation is global,” says Rachel Soares, director of research at Catalyst.
“Regardless of whether your particular country is or isn’t going to [enact a] quota, other countries are and that will impact you and your operations.”
Regulatory measures seem to be working – many countries have well eclipsed the US on boardroom diversity. Only a few years ago, US boards were comparatively more diverse than those in Europe. Now, the US seems to be nearly standing still on this issue, while other countries develop new policies that seem to work.
Canada for years has been toying with the idea of enacting quotas or voluntary targets for diversity. Late last year, the Ontario Securities Commission announced that companies traded on the Toronto Stock Exchange would have to describe their policies for improving boardroom diversity.
Germany also announced late last year that its voluntary system, whereby companies could set their own diversity targets, would be replaced with a quota. The boards of large, publicly traded countries will have to be 30 percent female by 2016. Currently only 18.5 percent of board seats are held by women at German listed companies.
Women Influencing Diversity
The census, which was tallied last October, showed that only 18 companies in the S&P 500 have zero women on their boards – but that number has dropped even since then. Two companies previously on the list, Under Armour and CF Industries, added women to their boards this fall.
While it’s becoming unusual for companies to have no women on their boards, Stellings says, having only one or two is still far too common. But, she says, many executives are working to change this.
For example, Catalyst’s sponsorship program for board-ready women has helped propel several women onto boards. Executives – both male and female – nominate and work with talented women and help them advance to board seats. For example, Stellings says, Maggie Wilderotter, CEO of Frontier Communications, sponsored a woman as part of the program who recently joined a board.
Similarly, she says, another woman who was part of the program as a protege and is now a board director is now sponsoring women in the program as well.
“These are powerful stories of women paying it forward,” she says.
But women board directors can’t – and shouldn’t be expected – to do it alone. lf the entire population of the board is going to reap the benefits of diversity, then the entire population of the board should be responsible for making that diversity a reality.
