Shareholders and institutional investors value companies with women on their boards. This is because the board is able to tap into a diversity of talent and leadership styles, so that the board can be better governed and better managed in order to enhance long-term growth prospects and value for shareholders. This presents a win-win proposition for the company, its shareholders and institutional investors.
For example, the International Corporate Governance Network (ICGN), comprising institutional investors responsible for managing more than US$18 trillion in assets, stated that boards should have a “sufficient mix of relevant skills, competence, and diversity of perspectives”. The ICGN considers gender diversity an important factor in helping to ensure a diversity of perspectives on the board.
Major institutional investors, California Public Employees’ Retirement System (CalPERs) as well as Amazone, have included gender diversity as an indicator among their investment criteria. In addition, corporate governance rating agencies such as GMI Ratings are increasingly developing tools to measure gender diversity as a key performance indicator for corporate performance and investment recommendations.
Investors around the world are urging companies to improve their board gender diversity. For example, in the UK, institutional investors have been proactively engaging FTSE 350 companies to urge them to increase the number of women in leadership positions within the companies. In the US, the Thirty Percent Coalition (a group of senior business executives, national women’s organisations, institutional investors, corporate governance experts and board members) have been writing to companies who have no female directors, urging them to improve female representation on their boards. These investors control US$1.2 trillion in assets. As at June 2012, they have written to 127 companies.
Indeed, the benefits of gender diversity on corporate governance and management of companies should ultimately translate into better valuation and long-term shareholder value.
The current level of women representation on boards in Singapore does not position Singapore and our companies favourably in the eyes of shareholders and institutional investors. We must be mindful that women themselves are also shareholders and would be looking out for companies with good women representation on boards. Attracting shareholders and investors to Singapore would allow us to create a vibrant economic ecosystem and ultimately give our companies a competitive edge in the global marketplace.
“Singapore has always been an excellent country to work in, in terms of meritocracy, ease of working, day-to-day business etc. As a leading international financial centre, Singapore is recognised for its high governance standard and practice. Good governance includes board diversity and it is evident that gender diversity remains a challenge in Singapore’s boardrooms. Based on recent data, we have only 8% female board representation, which is way lower than our Asian neighbours. It is time that we pay greater attention to and address this lacking in our boardrooms. Authorities, professionals, companies and directors are already working together to take bigger and bolder steps to nurture and establish a well-balanced marketplace of best talents from both genders.”
– Male CEO of a large market-capitalisation listed company