October 22, 2014

Corporate Boards Make Steady But Slow Progress Towards Gender Equality

Thomson Reuters releases findings from latest study on the progress and benefits of women on corporate boards

London, New York - Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, released its latest study on gender diversity in the boardroom, which shows how the presence of women on corporate boards has continued at a steady, albeit incremental, increase over the past five fiscal years, and that for the first time, more than half of corporate boards reported that 10% or more of their board is female. The report also shows that companies with mixed boards continue to perform marginally better, on average, compared to a benchmark index, such as the MSCI World.

The report, 'Climb to the Top – Tracking Gender Diversity on Corporate Boards', reveals how the progression of women on corporate boards has changed over time, region and by sector, and whether gender diversity helps drive stock performance. It also looks at the proportion of companies with processes in place to drive diversity and equal opportunity. Key findings include:

  • Global trends indicate a gradual increase in the percentage of companies that have women on their boards with 64% of companies reporting women board members, up from 56% in 2009.
  • Only 20% of the companies analyzed report having a board consisting of 20% or more women (13% in 2008); however more than half (51%) report boards of 10% or more women (40% in 2008).
  • From a regional perspective, EMEA has widened its lead in having at least 20% female board members. EMEA has also overtaken the Americas for having at least 10% of female representation on the board since 2009, whilst companies in the Asia Pacific region continue to report having the least gender diverse boards.
  • Adoption of policies and processes regarding gender diversity and equal opportunity has been increasing and is particularly high among companies in Europe and the Americas. Asia Pacific companies have shown the greatest increase in the implementation of diversity and equal opportunity processes over the last five years, but remain well below the levels reported in other regions.
  • Indices made up of companies with mixed boards have low but generally positive tracking errors to benchmark, e.g., MSCI World Index; in other words, they outperform their benchmark index. Indices with no women on their boards had slightly higher tracking errors, indicating potentially more volatile portfolios and on average underperformed relative to mixed boards.
  • By sector, Healthcare, Financial and both Noncyclical and Cyclical Consumer Goods & Services companies lead in gender-diverse boards.

"Clearly our data shows that there are advantages of having more women on corporate boards," says André Chanavat, product manager, Environmental, Social & Governance (ESG) at Thomson Reuters. "Although progress towards gender diversity on corporate boards is slow, it is indeed moving in the right direction to a global advantage that allows for increased transparency, performance and overall effectiveness."

'Climb to the Top – Tracking Gender Diversity on Corporate Boards' analyzes the level of gender diversity on corporate boards compiled from 4,255 public companies globally, using data from Thomson Reuters ASSET4 universe which provides objective and transparent environmental, social and governance (ESG) information. In addition, it raises the questions of what needs to be done for companies to hire more women to corporate boards.

This study complements Thomson Reuters "Mining the Metrics of Board Diversity" analysis from July 2013, which revealed that corporations were doing more to track the number of women they employ, and that those corporations with more women at managerial levels appeared to benefit from healthier share prices in times of market turmoil. 

Thomson Reuters ASSET4 ESG database provides in-depth environmental, social and governance information enabling socially responsible investment analysis. The ESG database contains information on 4,200+ global companies and over 750 data points covering every aspect of sustainability reporting.

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