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Women on Corporate Boards l Quick Take

THE BENEFITS OF GENDER-BALANCED BOARDS

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

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 representation5

  • 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

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

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 almost half (43%) of new board independent directors in the S&P 500, a decrease from 47% in 2021. 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

  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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