Gender Quota Warning for Top Corporations

If Australian boards continue to underperform on the issue of gender diversity, the market will have no choice but to resort to Government to introduce quotas to force change, an inaugural International Women’s Day event presented by Associations Forum and Governance Institute of Australia has been told.

Governance Institute President Trisha Mok told the audience that the world’s largest fund manager, Blackrock, considers gender diversity to be such an important factor in predicting investment performance that it conducts an annual study into the diversity disclosures of the ASX200.

“Blackrock’s latest report for the 2014 year — while showing some improvement particularly at board level (21 per cent of women in non-executive director roles and 10 per cent in key management personnel roles) — clearly demonstrates that a commitment to gender diversity is not in Australia’s corporate ‘DNA’,” Mok said.

“In addition, the report noted that the overall standard of diversity disclosures, even in the ASX200, was ‘perfunctory’ at best.

“As was expressed by a major institutional investor: ‘If they are missing this, what else is the board missing?’ That question is unlikely to go away. Which means that the debate on quotas is unlikely to go away, if corporate Australia doesn’t lift its game on gender diversity.” 

Mok said many European countries are imposing quotas to prescribe the proportion of women on boards. “Norway, Belgium, Iceland, Italy, the Netherlands, Spain and France have all embraced legislative quotas. The UK Government has also raised the prospect of quotas if companies do not appoint more female directors voluntarily.

“And while quotas might not be on the current Government’s agenda, that does not mean it won’t be a priority for future governments. Investors are already pushing boards on targets, and will push for quotas if there is inaction,” she said.

Recently, the Australian Council of Superannuation Investors (ACSI), which represents superannuation funds owning about 10 per cent of ASX200 companies, announced that it aims to have women make up 30 per cent of board members in the companies in which they have a significant interest.

ACSI’s CEO, Gordon Hagart said; ‘Having one woman on your board is not, however, ‘job done’. And having no women on your board leaves ACSI, and its members, wondering about the fitness of company chairs that have not yet been able to find an appropriately skilled woman to appoint. What else might they have missed in their role?”

“The reality is that failure of voluntary action to deliver gender balance on boards within a practicable timeframe could be a wake-up call for stronger measures,” Mok said.

The speech also coincided with a milestone report detailing women’s representation in leadership of Australian employers that are members of the Male Champions of Change initiative.

The MCC Progress Report shows the extent to which these workplaces are achieving equality for women using performance benchmarks from the Workplace Gender Equality Agency and other leading indicators.

Created in 2010, by Sex Discrimination Commissioner Elizabeth Broderick, the MCC includes 25 of Australia’s male leaders – the Chief of Army, Non-Executive Directors and CEOs of many of Australia’s largest companies, and calls on men to step up beside women and drive gender equality in their places of work.

”It is important to emphasise that improving gender balance at work is not a women's issue, it is a significant social and economic issue that all Australians are responsible for,” Commissioner Broderick said.

“The Progress Report is an annual opportunity to share learnings, and compare MCC organisations to industry metrics.  The Workplace Gender Equality Agency benchmarks represent a terrific opportunity for all leaders to consider whether they are reaching their aspirations to leverage all of Australia’s talent.

“There are some significant accomplishments and examples in the report.  There are also many opportunities for improvement.  The men are not Champions because they are perfect role models, but rather because they are committed to taking action to increase the representation of women in leadership.  

“The Progress Report demonstrates their willingness to stand behind their numbers and that they are constantly working to identify what else can be done to drive improvement.”