Women Bosses Still Too Few

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    Stockholm (NordSIP) – International Women’s Day is a prime occasion for a gender-related stocktake. Right on cue, Impact Cubed, a provider of ESG impact data and analytics solutions, delivers a comprehensive summary of the current state of female representation within senior management across the globe. “The findings reveal a story of slow progress – with an annual increase of less than 1%,” concludes the research. Extrapolating the rather unimpressive growth pace, the analysts calculate that it would take 32 more years to reach gender equality in senior management.

    In this study, Impact Cubed has analysed every listed company globally, looking into the evolution of gender diversity within senior management from 2014 to 2023. Encouragingly, women’s representation has increased on average by approximately 7.8 per cent over this period, a slow but steady progress towards a more equal representation. The analysis demonstrates, however, significant regional disparities and differing rates of progress.

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    Absolute winners (and losers)

    Digging into the country rankings, it is hardly surprising to find the Nordics, if not at the very top, at least high up on the list for 2023. With 27.7 per cent of women in management, Sweden ranks number three globally, slightly below the gold and silver-winners, New Zealand (29.8 %) and Botswana (28.8 %). Finland and Norway, boasting 27.1% female managers each, and Iceland (26.8 %) are still among the top ten and Denmark (26.0 %) ranks just below, at eleventh place.

    At the very bottom of the list is South Korea. Only 1.2 per cent of the managers in the Asian tiger economy are women. Another notorious country in the region, Japan, comes fourth from the bottom with as little as 5.6% of female managers. “Japan’s slow pace of progress in gender equality in the workplace suggests that companies within this market may not be fully capitalising on the benefits of a diverse leadership team, potentially impacting their innovation, corporate governance, and ultimately, their financial performance,” states the report.

    The rest of the laggards on gender diversity are to be found in the Gulf, with Qatar (4.2 %), Saudi Arabia (4.3 %), Kuwait (5.9 %), UAE (6.7 %), and Bahrain (9.8 %) among the top ten worst performers. Russia, at 12.2 %, comes tenth from the bottom.

    Leading the change

    The report highlights two countries in particular as frontrunners, showcasing the most substantial increases in the percentage of women in senior management roles. Portugal leads, with a 16.4 % increase. Part of the explanation for this remarkable growth lies in the effectiveness of policies, especially its pioneering Law 62/2017, which mandates a minimum percentage of gender equality for publicly listed companies. Even Australia shows an impressive 14.1% increase. According to the analysts, women’s representation in political leadership has influenced positively Australia’s gender equity.

    Among the Nordic countries, Sweden demonstrates a remarkable progress of 10.6 %, added to an already high representation in absolute terms. The rest of the Nordics exhibit a somewhat more modest growth of around 7 %. Iceland seems to have slowed down the most, with a growth of only 4.7 %.

    Rather discouragingly, the country at the bottom of the absolute gender diversity league, South Korea, is also the one with the slowest growth, at 1.2 %.

    Why bother?

    In an attempt to encourage investors to consider gender diversity as a factor when evaluating companies and making key investment decisions, the researchers apply the data on the gender composition of management teams to financial performance.

    Comparing the absolute returns of the top and bottom quintile companies for gender diversity from the MSCI All Countries World Index over a period from 2014 to 2023, the analysts at Impact Cubed find that companies with a higher representation of women in senior management positions have consistently outperformed those with lower representation. Admittedly, investment returns are influenced by a wide range of factors, and a positive relationship between gender diversity and returns is just one angle of investment analysis. Still, the backtest indicates a significant outperformance of companies with more diverse management.

    “As we observe International Women’s Day, let us commit to leveraging these insights to foster environments where gender diversity is not just celebrated but actively pursued,” concludes the analysis. “The data presents a clear call to action: to build upon the progress made and address the gaps that persist.”

    Image courtesy of © Shutterstock
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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