You are here: Home Knowledge Base Society Board Diversity and Corporate Governance Proposals Create a ratings scheme to independently evaluate the gender diversity performance of companies and to encourage gender balanced board and staff recruitment and inclusive corporate cultures.
Symposium 2011

Proposal - Create a ratings scheme to independently evaluate the gender diversity performance of companies and to encourage gender balanced board and staff recruitment and inclusive corporate cultures.

The Challenge

The global financial crisis has led to demands for greater transparency in corporate practices. But less attention has been paid to whom the players should be in this new environment. Corporate boar ...

The global financial crisis has led to demands for greater transparency in corporate practices. But less attention has been paid to whom the players should be in this new environment. Corporate boards across the world generally have a predominance of male directors. Research shows a lack of diversity in terms of gender, race/ethnicity and international expertise at a time when “global” defines the business climate.

This solution would involve the development of a rating scheme designed to benchmark sector leadership and to reward emerging commitment to greater gender diversity at the board and senior executive level. It involves the development of an independent voluntary ratings scheme which builds on current public reporting supplemented by an independent evaluation. This evaluation would be based on a rigorous, transparent research methodology enabling institutional comparison both within countries and beyond. Organizations that performed well would be able to communicate that excellence through a "gender star ratings scheme" in the same manner companies can now communicate their excellence in product and service performance in industries such as financial services. In Australia, there is no current ratings system of this kind in gender diversity despite extensive reporting requirements. Some performance data is captured by Government Agencies and a small number of metrics are captured in corporate social responsibility ratings schemes, however there is no easy way to compare different organizations to assess gender diversity performance. The most likely way to progress this solution would be to leverage a relationship with an established global ratings agency. With the most likely initial group of participants being large listed companies, a scheme with global reach would be preferable to provide greater competitive value to participants. This solution would make transparent progress towards increased board diversity and would encourage competition amongst institutions to achieve an acceptable level of board diversity. It would work well with a system of "targets" or "quotas" as this solution represents the carrot rather than the stick.

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