International Women’s Day 2023 is a time to emphasize the importance of equality and inclusive growth by providing greater opportunities for women at all levels of business. We strongly believe diversity is a source of financial out-performance and sustainable value creation. Many studies have also shown that having women on a board of directors is good for business.
As an example, Harvard TH Chan School of Public Health says: “When Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile… reported a 42% greater return on sales and a 53% higher return on equity.”
“The addition of women to the boardroom is not a silver bullet, but it can be the beginning of deep rooted and much needed cultural change within an organisation.” Bonnie Y Chan, Head of Listing, HKEX said1.
Voting for change
This stance resonates with the recent plans of Canada Pension Plan Investment Board (CPP Investments) to update its proxy voting principles and guidelines (PVPGs) for 2023, with an eye on further advocacy of greater gender diversity in corporate boardrooms.
The change is set to be announced in early March 2023. Companies will need to have two women, or a “rounded 30 percent” of female directors on the board in emerging markets, including Asia, according to the new guideline.
The operating environment is obviously becoming more complex, and this increases the value of ensuring strategic debates and decisions are informed by more diverse perspectives in the boardroom.
Women on board
Over the past few years, investors and regulators across Asia have increasingly focused on improving corporate gender diversity, for instance, requiring mandatory disclosure and board gender diversity quotas.
The Hong Kong Stock Exchange (HKEx) introduced rules in 2022 to end “single-gender” boards2, and all board issuers must appoint at least one director of a different gender by 31 December 2024.
Heightening its drive for board diversity and inclusion, HKEx has adopted a repository3 which aims to improve information transparency about good governance approaches by keeping investors and other stakeholders informed.
Data regarding each issuer’s board of directors, by age, gender and years of tenure, will be available on the centralised platform. Users are able to choose a particular industry sector to facilitate assessment of the company’s performance against peers.
3Key findings (As of March 2023)
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Slow but steady progress
HDH believes ‘walking the talk’ is critical to success. That is why we have made gender diversity a central pillar of our approach to corporate social responsibility in the course of our advisory to our client companies, by encouraging them to make greater efforts in female board membership, no matter through voting rights or increased dialogue with companies.
We wish women around the world a happy, healthy and sustainable International Women’s Day. A tribute to all the game changers who push for improved gender diversity on the boards and management teams of companies around the world.
Related resources
Exchange publishes conclusions on review of corporate governance code (HKEX, 10 Dec 2021)
1Source: An article in ESG Investor on 3 September, 2021
2The Exchange will not consider diversity to be achieved for a single gender board (Main Board Listing Rule 13.92 / GEM Listing Rule 17.104).