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Symposium 2011

Proposal - Work with local securities exchanges

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.

Work with local securities exchanges to incorporate a requirement that all listed companies set “targets” for the number of women on the board and at senior executive level and report annual progress against the target

One reason many initiatives aimed at increasing women’s representation on Boards have not resulted in greater gender diversity is that they often fail to engage the corporate sector. Real change in the number of women appointed to Boards and at senior management level requires strong leadership and a robust commitment from the corporate sector, especially corporate governance bodies of local securities exchanges. Governance bodies of local securities exchanges occupy a unique position to influence the operation and practices of the top companies in their countries. Changes made to these guidelines to require companies to set measurable objectives for the number of women at decision making level will encourage a greater level of gender diversity.

From 2009 to 2010, there was an almost 600% increase in the number of women appointed to Boards of the top 200 companies listed on the Australian Securities Exchange (ASX). The actual numbers are quite small – 10 women in 2009 and 59 in 2010. In 2011, 41 women have already been appointed (as of 29 August 2011).1 However, the strong message is that Australia is on its way to increasing women’s representation on Boards. We now have 13% of all ASX200 Board positions held by women compared to only 8.3% eighteen months ago.

Much of the impetus for this rapid improvement resulted from diversity-related changes to the ASX Corporate Governance Principles and Recommendations, which came into effect on 1 January 2011.2 The revised principles and recommendations require all publicly listed companies (over 2,000) to set “measurable targets” for achieving gender diversity on Boards and at senior executive levels. Publicly listed companies are required to disclose the targets to the market and include a statement in their annual report on their progress towards those targets. Companies that have not met their targets are required to explain why not. The revised principles and recommendations also require companies to disclose in their annual report the proportion of women employees in the whole organisation.

This approach has resulted in significant progress over the last 18 months.

 

1 - Australian Institute of Company Directors, Board Diversity – Statistics, http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-Issues/Board-Diversity/Statistics (viewed 14 September 2011).

2 - AXS Corporate Governance Council, Corporate Governance Principles and Recommendations with 2010 Amendments, Australian Securities Exchange (2nd revised ed, 2010), pp 24-25. At http://www.asxgroup.com.au/media/PDFs/cg_principles_recommendations_with_2010_amendments.pdf (viewed 14 September 2011)

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