Publicly listed companies will come under new pressure to promote women to boards and management under proposed new stock exchange rules. NZX chief executive Mark Weldon told the Listener that the stock exchange will be proposing new rules that will require all publicly listed companies to declare how many women and minorities they have in senior roles and as directors.
“What we would intend to consult on and would seek feedback on is a proposal that would see companies required to report on or disclose on the gender and other diversity makeup of board and management.” The change is to be part of NZX’s biannual rules review process, and could take force from June 2012.
I’m firmly against any sort of quota system for publicly listed companies. A quota would demand existing female directors, who might then be seen as token appointments.
However transparency in reporting is another issue.
NZX’s moves follow a rule change by the Australian Stock Exchange has led to a 50% jump in representation of women on boards in the space of just 18 months. By the beginning of August, 12.7% of Australia’s top 200 listed companies had women directors, compared to 9.3% for the top 100 listed companies here. The Australian policy recommends publicly listed companies have a gender diversity policy, and that they report progress on meeting its goals on it regularly.
The wording Weldon is proposing goes further in several ways: it is mandatory rather than voluntary; it demands direct reporting of diversity numbers; and it goes beyond gender to include diversity generally, which includes ethnic diversity.
I’ve spent around a decade on a couple of company boards. By coincidence all four board chairs I have worked with have been women, and all have been excellent directors and chairs. There are many female directors who would add value to a top 100 listed company, and there is a bit of an old boys network because directors are inevitably always recommended by existing directors, so a lot of it is down to who knows who.
So I do not have a huge problem with reporting gender diversity, but I do get concerned over the wider diversity requirement. Will boards have to report Maori, PI, and Asians? And maybe how many of a particular religion or sexuality?
Diversity is good, but boards tend to be quite small – 10 or so directors. So while one can usefully look at gender diversity, I think it should not extend beyond that. Otherwise you may end up with boards seeking a stereotypical gay catholic asian for directorships!
UPDATE: The Institute of Directors announced last week:
The Institute of Directors (IoD) has given the go ahead to a new mentoring scheme aimed at increasing the number of women on NZX-listed boards. The IoD’s Chairmen Mentoring Programme will enlist up to 30 chairmen and senior directors of major companies to work with experienced and qualified women in a year-long programme.
That’s a really good idea.