For the past three years, I have been a member of the steering committee of the 30% Club, led by Helena Morrissey CBE, CEO of Newton Investment Management. The 30% Club launched in the UK in 2010 with an initial goal of FTSE-100 boards having female representation of 30% or more by the end of 2015.
Over this period, the under-representation of women at senior levels in almost every area of society – business, politics, the public sector, professional services, sports bodies, academia and the arts – has attracted a huge amount of attention here in the UK.
But after decades of snail-like progress, accelerated results over this relatively short time indicate that finally we are taking the right actions to address the issue – in a sustainable and meaningful way.
This is showing through strongly in “women on boards” figures, where women now make up over 20% of the boards of FTSE 100 companies (2010: 12.5%) – with just one, somewhat isolated, all-male board remaining (2010: 21 all-male boards) . Rather encouragingly, since 1 March 2013, some 30% of all board appointments to the FTSE 350 have been women (FTSE 100 – 29%; FTSE 250 – 33%) .
There is no doubt that a key breakthrough has been the acceptance that better gender balance at senior levels is a business issue, not just a women’s issue – taking the issue beyond a specialist diversity effort and into mainstream talent management. There is increasing agreement that diversity at board and top executive level in terms of skills, gender and nationality is a key factor in the quality and performance of boards. Improved boardroom dynamics, greater diversity of perspective, varying attitudes to risk and a better ability to connect with consumers are all acknowledged as powerful benefits of a mixed gender board. As a result, we have seen a radical shift in the way business leaders are approaching the issue of what makes a more effective corporate board – including by institutional shareholders, who simply want the opportunity to invest in more successful companies.
So what has been the catalyst behind this breakthrough? How have we improved outcomes and moved away from a period where efforts exceeded results?
While there has been no 'silver bullet’, there has been a combination of factors coming together to powerful effect – a formula for change that might prove useful elsewhere.
• The most important driver was undoubtedly senior business leaders’ involvement – those who could make a real difference in terms of female appointments. There are now just under 100 members of the 30% Club – chairs of listed companies, professional services firms and public sector bodies. The impact of their visible commitment – most of whom are, of course, men – cannot be overstated. Their public support has made a big impact, for example, on the board recruitment process, especially the executive search firms.
• The focus of a specific and measurable goal – an aspirational target, not a mandatory quota – has provided real impetus for change. The original emphasis on boards has widened to include developing the executive pipeline of female talent; the aim is now 30% women at all senior levels.
There were a number of other key ingredients:
• One has been timing. The zeitgeist has been right for change: the financial crisis highlighted the dangers of homogeneous boards – “groupthink” – and the status quo.
• Similarly, the European Commission threatening to introduce quotas, which the 30% Club does not support, has brought a sense of urgency to the debate, and helped highlight voluntary action as the preferred way.
• This increased political attention was a key driver behind Lord Davies publishing his excellent report into the (then) scarcity of “women on boards” shortly after the Club launched. The Davies Report set out ten clear recommendations in 2011 - a useful and replicable blueprint for change.
• Where no initiative existed around a Davies recommendation, we set out to address this. For example, establishing an investor group, which I chair, representing over £3 trillion assets, to engage with companies.
• Importantly, the UK's Financial Reporting Council (FRC) made changes to the UK Corporate Governance Code which reflect the view that gender diversity strengthens board effectiveness by reducing the risk of "groupthink", making fuller use of the talent pool and keeping companies in touch with their customers.
• The 30% Club investor group‘s approach is one of constructive engagement with listed companies as part of broader analysis of a company’s governance and development of future top talent. We have been encouraging improved disclosure beneath the board and executive committee levels. Where insufficient action is taken, individual members of the investor group are prepared to use their voting rights to encourage greater response. This approach is set out in our paper “Diversity and Stewardship – the next steps” .
Under-representation of women at senior levels is a global phenomenon – so the 30% Club has gone global. A Hong Kong 30% Club, for example, launched in March 2013. A US 30% Club launched in April 2014, with 25 founding supporters including Warren Buffett of Berkshire Hathaway, Larry Fink of BlackRock and Peter Grauer of Bloomberg. We launched in Ireland last month and further Clubs are planned in 2014 in Canada, Australia and South Africa.
While each of these countries has a different starting point, and like here in the UK, progress won’t always be straightforward, there is a real sense that business leaders can be the catalysts for accelerating real change.
Emma Howard Boyd, Director, Stewardship, Jupiter Asset Management and Chair, 30% Club investor group
The above commentary represents the views of the author at the time of preparation and may be subject to change. Their views are not necessarily those of Jupiter. Every effort is made to ensure the accuracy of any information provided but no assurances or warranties are given. Jupiter Asset Management Limited (JAM) is authorised and regulated by the Financial Conduct Authority.