Women on Corporate Boards: Quick Take

THE BENEFITS OF GENDER-BALANCED BOARDS

Women Need to Hold at Least Three Board Seats for Companies to Reap Diversity

In 2019, slightly more than one-third (36%) of global (MSCI ACWI¹) boards had at least three women, up from 32% in 2018.²

• Research from scholars and organizations has found that women need to hold at least three board seats to create a “critical mass,” which can lead to better financial performance).³
• Reaching critical mass can change boardroom dynamics substantially, creating an environment in which innovative ideas can spring from gender diversity. ⁴

Women’s board tenures are shorter, and women are less likely to hold leadership positions than men. ⁵

• Women holding leadership positions on boards is positively associated with other women directors having longer board tenures.⁶

Recognizing the value of gender-diverse boards, institutional investors are starting to vote against all-men boards in US companies. ⁷

GLOBAL

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

Of the 2,765 MSCI ASWI Index companies, 20.0% of directors were women in 2019, up from 17.9% in 2018.⁸

An analysis of more than 8,600 companies in 49 countries showed women held 16.9% of all global board seats in 2018, up from 15.0% in 2016.⁹

Only 5.3% of board chair positions were held by women in 2018. ¹⁰

• 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

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 located in jurisdictions with no elective or compulsory gender quota requirements, only 20.3% of boards reached the 30% women director threshold, and 23.0% had no women directors.

CANADA

Nearly a Quarter of Financial Post 500 Board Seats Are Held by Women

Women held nearly one-quarter (24.5%) of Financial Post 500 board director seats in 2018, up from 22.6% 2017.¹⁴

Almost half (43.7%) of board directors in Financial Post 500 companies indicated that their board had a target for the number of women on their boards in 2018.¹⁵

Of all Financial Post 500 companies, 15% had no women on their board.¹⁶

TSX Boards Have Made Some Progress

Of the 726 companies on the TSX reporting women board director data, companies reporting zero women on their boards declined from 37.3% in 2017 to 31.7% in 2018.¹⁷

All 240 companies on the TSX Composite (representing roughly 70% of total TSX market cap) now have at least one woman board director.¹⁸

In the European Union, Quotas Are Improving Progress

As of October 2018, women held 26.7% of board seats in the largest publicly listed companies in EU member states.¹⁹

• Women comprised 6.7% of board chairs in 2018, which more than doubled from 3.3% in 2012.²⁰

Nine of the top 10 countries ranked by the percentage of companies with three or more female directors were in Europe; all but one of these countries (UK) have gender quotas in place²¹

As in 2018, European company in the MSCI ACWI Index had at least one female director.²²

• Women of color were 10% of new directors.²⁸

Women are also underrepresented on Fortune 500 boards. In 2018, fewer than one-quarter (22.5%) of board directors were women.²⁹

• In the same year, women of color accounted for only 4.6% of board directors in the Fortune 500. ³⁰

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.³¹

Illinois, Massachusetts, New Jersey, and New York have all introduced legislation aiming to improve the representation of women on corporate Boards.^{32 33}

1. 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.”
2. Olga Emelianova and Christina Milhomem, Women on Boards: 2019 Progress Report (December 2019): p. 5.  
3. Cynthia Soledad, Karoline Vinsrygg, Ashley Summerfield, and Jennifer Reingold, 2018 Global Board Diversity Tracker: Who’s Really On Board? (Egon Zehnder, December 2018): p. 11. 
4. Carolyn Wiley and Mireia Monllor-Tormos, “Board Gender Diversity in the STEM&F Sectors: The Critical Mass Required to Drive Firm Performance,” Journal of Leadership & Organizational Studies, vol. 25, no. 3 (January 2018).
5. Yaron Nili, “Beyond the Numbers: Substantive Gender Diversity in Boardrooms,” Legal Studies Research Paper Series Paper No. 1436 (University of Wisconsin Law School,  2018). 
6. Yaron Nili, “Beyond the Numbers: Substantive Gender Diversity in Boardrooms,” Legal Studies Research Paper Series Paper No. 1436 (University of Wisconsin Law School,  2018). 
7. Steve W. Klemash and Jamie C. Smith, “Five Takeways from the 2019 Proxy Season,” Harvard Law School Forum on Corporate Governance and Financial Regulation, August 8, 2019.
8. Olga Emelianova and Christina Milhomem, Women on Boards 2019 Progress Report (MSCI, December 2019).
9. Deloitte Global Center for Corporate Governance, “Women in the Boardroom: A Global Perspective, Sixth Edition,” (2019).
10. Deloitte Global Center for Corporate Governance, “Women in the Boardroom: A Global Perspective, Sixth Edition,” (2019).
11. Deloitte Global Center for Corporate Governance, “Women in the Boardroom: A Global Perspective, Sixth Edition,” (2019).
12. Olga Emelianova and Christina Milhomem, “Women on Boards 2019 Progress Report“, (MSCI, December 2019).
13. Olga Emelianova and Christina Milhomem, “Women on Boards 2019 Progress Report“, (MSCI, December 2019).
14. Canadian Board Diversity Council, Annual Report Card 2018: Advancing Diverse Leadership on Canada’s Corporate Boards (PhaseNyne, 2018).
15. Canadian Board Diversity Council, Annual Report Card 2018: Advancing Diverse Leadership on Canada’s Corporate Boards (PhaseNyne, 2018).
16. Canadian Board Diversity Council, Annual Report Card 2018: Advancing Diverse Leadership on Canada’s Corporate Boards (PhaseNyne, 2018)
17. Andrew MacDougall, John Valley, Jennifer Jeffrey, Ramz Aziz, Madison Black,Jennifer Cao, Marleigh Dick, Dhananjay Ghildyal, Sunia Hassan, Aly Kim, Bradley Lastman, Reba Nauth, Janice To and Tiye Traore. “2019 Diversity Disclosure Practices”, (Osler, 2019): p. 16.
18. Ladies First: All 240 TSX Composite companies now have at least one female director, Corporate Knights, October 30, 2019.
19.   European Commission, “2019 Report on Equality Between Women and Men in the EU,” (European Union, 2019): p. 26.
20. European Commission, “2019 Report on Equality Between Women and Men in the EU,” (European Union, 2019): p. 31.
21. Olga Emelianova and Christina Milhomem, “Women on Boards 2019 Progress Report”, (MSCI, December 2019).
22.  Olga Emelianova and Christina Milhomem, “Women on Boards 2019 Progress Report”, (MSCI, December 2019).
23. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019). p. 1.
24. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019). p. 20.
25. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019). p.20.
26. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019). p. 20.
27. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019)p. 11.
28. SpencerStuart, “2019 Spencer Stuart U.S. Board Index,” (2019)p. 11.
29. Rebecca Aydin, “California Will Require Women on Corporate Boards Under Bill Signed by Brown,” The San Francisco Chronicle, September 30, 2018.
30. Alliance for Board Diversity and Deloitte, Missing Pieces: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards (2019).
31. Rebecca Aydin, “California Will Require Women on Corporate Boards Under Bill Signed by Brown,” The San Francisco Chronicle, September 30, 2018.
32. Anastasia Boden, “Op-Ed: Setting Quotas on Women in The Boardroom Is Probably Unconstitutional. It Also Doesn’t Work,” Los Angeles Times, July 8, 2019
33. Eli Freedberg, “New York Corporations to Report Number of Women on the Board,” SHRM, January 30, 2020.