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Gender: A boardroom Issue

Kerby Meyers //July 8, 2015//

Gender: A boardroom Issue

Kerby Meyers //July 8, 2015//

Women comprise nearly 51 percent of the U.S. population and hold 47 percent of the nation’s jobs. In addition, 46 percent of the country’s companies are at least 50 percent owned by a woman and women account for 85 percent of all consumer spending decisions.

Scan the rolls of the boards of directors of U.S.-based publicly held companies, however, and the number of women is comparably quite meager. According to independent research firm GMI Ratings, in 2013, women held 16.9 percent of the director seats at S&P 500 Index companies, which are the 500 largest companies in the U.S., based on market capitalization. Among the companies in the S&P MidCap 400 Index, women held 13.5 percent director’s seats, while a mere 11.3 percent of the directors of the S&P SmallCap 600 Index companies were women.

In Colorado, the picture is worse. According to a Women’s Leadership Foundation study released earlier this year, women held slightly more than 9 percent of the board seats at 113 public companies based in the state in 2014. Moreover, 52 percent of the companies reviewed had no female board members.

As Shelley Ford asked in her July 1 article, “it’s clear that more representation is needed, but how can this be achieved?"

Tackling the imbalance

Given the gross disparity in board levels—and the less-than-stellar performance by select boards in recent financial crises—the issue of women in the board room has been gaining traction among advocates of good governance. In turn, within the responsible investing space, where an emphasis on environmental, social and governance (ESG) analysis carries commensurate weight with financial analysis, the matter is growing as a potential risk factor for companies that refuse to widen their perspectives.

In Europe, a number of governments have enacted quotas, with mandates of female board representation as high as 40 percent in countries such as Norway, Spain and France. Similar regulations in the U.S. are highly unlikely, but instead, a number of organizations have built campaigns that actively promote raising board diversity levels.

Most notably, 2020 Women on Boards has targeted a 20-percent threshold for women on corporate boards by 2020, and theThirty Percent Coalition is building a network of leaders in business, finance and advocacy to collectively push for a 30-percent achievement by 2016.

In Colorado, the Women’s Leadership Foundation and the Colorado Women’s Chamber of Commerce Foundation have collaborated on the Corporate Board Bound program for women interested in pursuing a board role. The program, rooted in the vision of at least three women on every board, offers an assessment of current strengths, mentoring, resources and, perhaps most critically, networking opportunities designed to help women bolster their candidacies.

Diverse boards can be beneficial

There are certainly dangers for companies that refuse to heighten the inclusivity of their board of directors. Most obviously, there’s a critical lack of perspective, especially given women’s prominent place in businesses, as customers and in homes. And increasingly, there are potential public relations and reputation liabilities risk for any board that sticks with the traditional old boy network model.

But the benefits go beyond “because it’s the right thing to do.” Consider the 2014 findings of MSCI ESG Research, which examined the boards of 6,500 companies around the world. At those companies that had a higher than average number of women on their boards, there was a lower incidence of controversies related to:

  • bribery
  • corruption
  • fraud
  • accounting issues

Furthermore, a study from global investment banker Credit Suisse surveyed more than 3,000 companies across 40 countries and found that the stock of companies with more than one woman on the board outgained those with no women between 2005-13.

The time has passed for debates over the value of female leadership in business. Instead, it’s time for corporate executives, existing boards and investors—women and men alike—to press for better representation among directors in Colorado companies and beyond.