Research

Women on Corporate Boards (Quick Take)

Nov 05, 2021

THE BENEFITS OF GENDER-BALANCED BOARDS

Research Shows When Women Hold at Least Three Seats, this “Critical Mass” is Good for Corporate Governance1

In 2020, of global (MSCI ACWI2) boards, more than one-third (38.5%) had at least three women, up from 36.2% in 2019.3

In 2020, of 11 sectors studied, Utilities showed the largest increase in percentage of companies (9%) with three or more women board directors making it the sector most successful at reaching the “critical mass”. 4

In the six-year period from 2014 to 2020, global boards made some progress toward increasing women representation. 5
  • In 2020, 75% of indices had boards with at least 22% women. 6
  • In 2014, nearly the reverse was true with 75% of boards having less than 25% women representation. 7

Just one more woman on a company’s board, while keeping the board size unchanged, produces an ROI of 8 to 13 basis points. 8

Recognizing the value of gender-diverse boards, institutional investors are starting to vote against all-men boards in US companies. 9

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GLOBAL

Although Boardroom Diversity Is Increasing, Women Remain Underrepresented and Progress Is Slow in 2020

Of the 2,907 MSCI ACWI Index companies, 20.6% of directors were women in 2020, up from 20% in 2019. 10

  • A 2018 study found that companies with a woman board chair were more likely to have a larger share of women board members (28.3%) compared to companies with men board chairs (17.1%). 11
Some Jurisdictions Have Imposed Mandatory Gender Quotas in an Effort to Increase Women’s Representation

Nearly three-quarters (71.8%) of MSCI ACWI companies located in jurisdictions with established compulsory quotas had at least 30% women directors in 2019. 12

  • Among companies without compulsory gender quota requirements, only 20.3% of boards reached the 30% women director threshold, and 23.0% had no women directors. 13

 

 

  Women’s Global Representation on Boards in Select Countries, 2020 14
Country % Women Directorships, 2020 % Women Directorships, 2019 % With Three or More WOB, 2020 % With Zero WOB, 2019 Mandatory and Voluntary Quotas,201915 
Australia 34% 31.2% 71.0% 1.6% No
Canada 31.3 29.1% 75.0% 0% No
France 43.3 44.3% 100% 0.0% Yes
Germany 25.2 33.3% 77.6% 3.4% Yes
India 16.6 15.9% 18.6% 5.8% Yes
Japan 10.7 8.4% 5.0% 21.6% No
Netherlands 25.5 34.0% 66.7% 0.0% Yes
Sweden 38.0 39.6% 91.2% 0.0% No
Switzerland 26.1 24.9% 54.8% 0.0% No
United Kingdom 34.3 31.7% 84.8% 0.0% No
United States 28.2 26.1% 66.0% 0.2% CA Only

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CANADA

TSX Boards Made Small But Steady Strides Toward Increasing Women’s Representation on Boards in 2019

Of the 629 TSX companies reporting women board director data, the percentage of all-male boards decreased to 15.7 in mid-year 2021.  Down from 18.3% in mid-year 2020 and 20% for full-year 2020. 16

  • Women held only 21.2 of all board seats. 17
  • The Utilities and Pipelines industry continues to have the highest average percentage of women on their boards (35%). 18
  • The average number of women on boards of all companies disclosing data, increased modestly from 1.69 in 2020 to 1.83 in 2021. 19

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EUROPE

In the European Union, Quotas Are Improving Progress

Overall, women held 29.5% of board seats in the largest publicly listed companies in EU member states in 2020. 20

  • In the largest listed companies in the six Member States with mandated quotas, women comprised 37.6% of board seats. 21
  • In countries without these hard mandates, only 24.3% of board members were women. 22
  • Less than 1 in 10 women were board chairs or CEOs. 23

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UNITED STATES

Boards in S&P 500 and Fortune 500 Companies Are Gradually Diversifying

More than one-quarter (30%) of S&P 500 board directors are women, a record high in 2020. 24

There were no all-male boards in the S&P 500 in 2021; all companies have at least one woman director. 25

Despite reaching these milestones, the representation of women on S&P 500 boards still remains low.
  • Only 36% of boards in 2021 have three women directors, while another 36% have four women directors or more. 26
  • Four percent of boards in 2021 include only one woman. 27

In 2021, women accounted for 43% of new board independent directors in the S&P 500, a decrease from 47% in 2020. 28

  • Women of color accounted for 18% of new board independent directors. 29
Women are also underrepresented on Fortune 500 boards.

In 2020, slightly more than one-quarter (26.5%) of board directors were women. 30

  • In the same year, women of color accounted for only 5.7% of board directors in the Fortune 500. 31
Quotas in the United States

In September 2018, California became the first state to introduce quotas requiring publicly traded companies to include women on their boards of directors. This mandate has been challenged as recently as July 2021. 32

Washington State enacted the Washington Business Corporation Act (WBCA) in June 2020. The WBCA mandates that public companies have a “gender-diverse board” of 25 percent women by January 1, 2022. 33

Colorado and Pennsylvania have passed legislation that encourage companies to support an increase in the number of women on boards and several other states—Hawaii, Massachusetts, Michigan, Ohio, and New Jersey—have introduced legislation addressing minimum board diversity requirements but have yet to pass formal actions. 34

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Learn More

The Case for Gender Diversity on Boards

 

Organizations

How to cite this product: Women on Corporate Boards: Quick Take. (2021). Catalyst.

  1. Kramer, V., Konrad, A .&  Erkut, S. (2006). Critical mass on corporate boards: Why three or more women enhance governance. Wellesley Centers for Women, Wellesley College. 
  2. MSCI is an independent research firm that develops global equity indexes; the MSCI ACWI Index contains all sources of equity returns in 23 developed and 24 emerging markets. MSCI, “MSCI ACWI Index.”
  3. Milhomem, C. (2020). Women on boards: 2020 progress report. MSCI. 
  4. Milhomem, C. (2020). Women on boards: 2020 progress report. MSCI. 
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  6. Sutton, D. & Architektonidis, A. (2021). Global gender balance report. BoardEx.
  7. Sutton, D. & Architektonidis, A. (2021). Global gender balance report. BoardEx.
  8. Global diversity tracker: Who’s really on board. (2020). Egon Zehnder 
  9. Klemash, S. & Smith, J. (2019, August 8).  Five takeways from the 2019 proxy season. Harvard Law School Forum on Corporate Governance and Financial Regulation. 
  10. Milhomem, C. (2020). Women on boards: 2020 progress report. MSCI.
  11. Women in the boardroom: a global perspective, sixth edition (2019). Deloitte Global Center for Corporate Governance. 
  12. Emelianova, C. & Milhomem, C.  (2019). Women on boards: 2019 progress report. MSCI.
  13. Emelianova, C. & Milhomem, C.  (2019). Women on boards: 2019 progress report. MSCI.
  14. Milhomem, C. (2020). Women on boards: 2020 progress report. MSCI.
  15. Women in the boardroom: a global perspective, sixth edition (2019). Deloitte Global Center for Corporate Governance.
  16. MacDougall, A., Valley, J. &  Jeffrey, J. (2021). Diversity disclosure practices. Osler.
  17. MacDougall, A., Valley, J. &  Jeffrey, J. (2021). Diversity disclosure practices. Osler.
  18. MacDougall, A., Valley, J. &  Jeffrey, J. (2021). Diversity disclosure practices. Osler.
  19. MacDougall, A., Valley, J. &  Jeffrey, J. (2021). Diversity disclosure practices. Osler.
  20. 2021 report on gender equality in the EU. (2021). European Commission.
  21. 2021 report on gender equality in the EU. (2021). European Commission.
  22. 2021 report on gender equality in the EU. (2021). European Commission.
  23. 2021 report on gender equality in the EU. (2021). European Commission.
  24. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  25. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  26. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  27. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  28. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  29. 2021 Spencer Stuart U.S. board index. (2021). Spencer Stuart.
  30. Missing pieces report: The board diversity census of women and minorities on Fortune 500 boards.(2021). Alliance for Board Diversity and Deloitte.
  31. Missing pieces report: The board diversity census of women and minorities on Fortune 500 boards.(2021). Alliance for Board Diversity and Deloitte.
  32. Francis, T. (2021, June 21). Appeals court revives challenge to California law mandating women board members. Wall Street Journal.
  33. Jaeger, J. (2020, November 3). Emerging state board diversity laws encourage proactive approach. Compliance Week.
  34. Jaeger, J. (2020, November 3). Emerging state board diversity laws encourage proactive approach. Compliance Week.