Companies cannot achieve diverse boards without addressing the issue of low women’s representation.

By Mildred Tan

This article was published on The Business Times on 31 August 2021, “Board diversity vital for long-term success“.

Done right, a strong board diversity policy, including gender, is a key element of future proofing a company. IMAGE: PIXABAY

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THE Covid-19 pandemic has prompted stakeholders to pay close attention to companies’ sustainability and resilience. Companies would therefore need to assure stakeholders about their ability to navigate constant change and uncertainty, anticipate risks and capture new opportunities.

Singapore Exchange (SGX) has begun a public consultation on the next evolution of its sustainability reporting regime. Among the proposals are the inclusion of a board diversity policy in the listing rules, and questions about whether such a policy should include gender and whether the proportion of women’s representation on boards and at senior management should be disclosed as part of the core environmental, social and corporate governance (ESG) metrics.

The proposals are timely, and the response to these suggestions should be an unequivocal “Yes”.

The consultation presents an opportunity for companies to communicate to stakeholders the benefits of diversity on boards and in leadership. They must progress towards making board diversity – including gender diversity – a core consideration when composing a board.

Board diversity optimises performance and long-term value

A company’s board of directors plays a critical role in charting corporate strategy, creating enterprise value and managing risks and opportunities especially during crises. Doing so requires a board to have a diversity of expertise and perspectives to assess situations from all angles, especially when encountering volatile, uncertain, complex and ambiguous (VUCA) scenarios.

It may be convenient to assume that board gender diversity should take a back seat during a global pandemic to more fundamental concerns like mere survival. But evidence continues to support the view that a gender-diverse board’s value may be greatest in times of crisis.

Researchers at the Universiti Teknologi Malaysia recently looked at 188 non-financial Malaysia-listed companies, and found that board gender diversity appeared to be “significantly enhancing firm performance” during the pandemic, according to a paper published in the Journal of Asian Finance, Economics and Business.

If the commercial and operational benefits of having women’s representation on boards were not enough, there is also a talent utilisation argument to be made.

A 2021 report by Grant Thornton showed that women held 33 per cent of senior management positions in Singapore. Yet, the Council for Board Diversity’s December 2020 data showed that women held fewer than 30 per cent of board seats among Singapore’s statutory boards and top 100 Institutions of a Public Character (IPCs), and just about 18 per cent of board seats in the top 100 companies listed on SGX. The gap between the proportion of women in senior management and on boards suggests that women’s low share of board seats in Singapore is not because of a lack of suitable women candidates.

More systemic reasons, such as a reliance on personal networks (that often comprises mostly men) to find director candidates, and a preference for candidates with prior board experience (comprising fewer women due to the small pool of women directors currently) are likely to be the cause.

Increased demand for fuller and transparent disclosure on board composition

While other dimensions of board diversity – including skills, knowledge, experience and age – are equally important, a diversity policy must address gender to be credible to stakeholders who are increasingly wary of greenwashing.

A company that appoints qualified and suitable women to its board has demonstrated the ability to search and attract talents for their boards.

A robust board diversity policy (including gender) has therefore progressed from a good-to-have to a must-have.

Gender-diverse boards are now a key voting consideration for major fund management firms, including AXA Investment Managers, BlackRock, Fidelity International, Legal & General Investment Management and State Street Global Advisors.

Gender diversity is also being measured by the likes of the UN Sustainable Stock Exchanges and Bloomberg’s Gender-Equality Index. Companies that do not address board gender diversity risk being shunned by those that own and direct capital.

Singapore-listed companies, especially, are falling behind. The pace at which women are gaining share in board seats among SGX’s 100 largest companies has slowed in the past three years, according to the Council’s data. The United Kingdom, Australia and Malaysia have widened their lead over Singapore when it comes to women on boards.

Recognising the benefits of fuller and more transparent disclosure on board diversity, including gender diversity, regulators from key and regional markets such as Australia, the UK and Malaysia have also introduced such requirements for companies listed in these countries. Nasdaq is the latest to require similar disclosures in its listing rules.

Given that context, SGX Regulation’s (RegCo) plan to require fuller and more transparent disclosure on board diversity is the right move and a necessary response to market demand.

Diversity and meritocracy can co-exist

While rules to require the consideration and disclosure of board diversity policies might provide important impetus for companies to think hard about gender, there is a risk that the rules could lead to companies approaching gender diversity as a box-checking or numbers game. The recent PwC study, Board diversity disclosures in Singapore: From intent to outcomes, found that although most Singapore listed companies disclosed a formal board diversity policy, they lacked the substance and concrete actions to substantiate their intentions.

Women on boards should not be perceived as mere statistics, which may lead down a path of quotas and tokenism. Instead, organisations should undertake a serious consideration of their board composition to reap the benefits of having a diverse board and achieve real, sustained, long-lasting change. The first premise should be that all directors be appointed based on merit.

Companies must ensure that they search far and wide enough to find the best candidates instead of relying on personal networks. Companies must also strive to constantly refresh their boards – including observing the nine-year rule on director independence – and prioritise bringing on new directors with competencies that suit the company’s circumstances and changing business conditions.

It is gratifying to see that 10 companies appointed first-time female directors in the first six months of 2021. These companies that appointed women who are first-time directors clearly understood the need for relevant expertise – as opposed to prior board experience – given the increasingly complex environments we find ourselves in.

The Council hopes that more organisations – including companies, statutory boards and IPCs – will similarly seek out female talent and give them equal opportunities to take the first step on a board. Every chairman knows he or she did not begin with board experience – they all had to start from somewhere.

Done right, a strong board diversity policy, including gender, is a key element of future proofing a company. As President Halimah Yacob, who is also patron of the Council, said in March 2021: “Those that cast the net wide for the best talents and experience to contribute to their boards will position their organisations well for long-term success.”

The writer is Co-Chair of the Council for Board Diversity.

First-time women directors appointed to 10 top 100 largest companies listed on SGX in H1 2021:

  • Ara Logos Logistics Trust
  • CapitaLand
  • Golden Agri-Resources
  • Great Eastern Holdings
  • Ho Bee Land
  • Keppel Pacific Oak US Reit
  • Sats
  • Thai Beverage
  • Tianjin Zhong Xin Pharmaceutical Group Corp
  • Wilmar International

The Council for Board Diversity (CBD) was established by the Ministry of Social and Family Development to promote and achieve sustained increase in the number of women on boards of listed companies, statutory boards and non-profit organisations. Visit for more information on how you can play a part and how CBD can help increase board diversity in Singapore.

The CBD, in collaboration with Centre for Non-Profit Leadership, Ernest & Young and Singapore Institute of Directors, has produced a Board Appointment Guide for Charities and IPCs that will provide practical guidance to charities and IPCs on their appointment processes, to achieve greater board diversity and governance standards.