Historically, corporate boards in many countries have been comprised mainly of men. A number of European market regulators are considering imposing quotas of women on the boards of publicly traded companies as a requirement in the new Code of Corporate Governance, and this is likely to compel business to consider gender diversity of corporate boards.
A report published by the Institute for Employment Studies notes that, “Despite long-standing anti-discrimination legislation in the US, UK and across Europe, women still remain under-represented in many occupations, most noticeably in high-level posts. This phenomenon is seen at its most extreme when the composition of company boards is considered. In the USA, women constitute on average 14.7 per cent of board members on Fortune 500 companies; in the UK, women hold 11 per cent of FTSE 100 directorships, according to the 2008 Sex and Power report published by the UK Equality and Human Rights Commission.”
The importance of gender diversification in the context of Pakistan is at an emerging stage and this concept has been recently discussed at the forum jointly organized by the Pakistan Institute of Corporate Governance (PICG) & International Financial Corporation (IFC). The aim of the workshop was to build the capacity of women currently serving in senior management positions or on corporate boards to enhance their existing skills, and prepare a pool of women who would be future directors.
IFC facilitated the two-day discussion and the deliberation among a number of women affiliated with different organizations. Key conclusions were:
- Qualified women professionals should enhance their knowledge about corporate governance and how corporate directors can play a pivotal role in the corporate world.
- Better education for women, along with economic needs and market demand, could play an important role in bringing more women to the corporate sector.
- At the board level, the masculine energy is valuable to task-focused activities and the feminine energy helps to hold customer and business relationships together.
The Code of Corporate Governance of Pakistan (indirectly) promotes gender diversity of corporate boards by recommending non-executive directors representing minority interest, lenders and institutional investors. In view of the international trends and developments in diversity, including gender diversity on boards, the Association of Chartered Certified Accountants (ACCA) Pakistan conducted a recent survey of 303 KSE 100 Index companies and a random sample of actively trading companies listed on the Karachi Stock Exchange. Out of the total surveyed companies, 31% have women on their board; 72% of those that have women on the board are family owned. Among KSE 100 Index companies, 78% do not have women on boards.
Key recommendations from the survey were:
- Development and advocacy of a business case for gender diversity on boards.
- Developing database of competent women directors.
- Corporate culture promoting gender diversity on boards.
Published Date: July 01, 2010