Women directors risk being spread across too many boards

Despite a noticeable uptick in the number of women serving on company boards in the past year, there are signs that organisations are choosing from a limited pool of female candidates who are offered multiple roles, rather than widening their choice

While 12% of men serve on three or more company boards, 22% of women hold multiple positions, according to a global survey of over 2,700 companies by MSCI.

The report noted: ‘Some observers have expressed concerns that companies seeking to add women to their boards tend to pull excessively from the pool of existing directors, resulting in those women becoming overboarded.

‘This finding may imply that despite the broad availability of educated and experienced female professionals, some companies have continued to rely on a limited pool of candidates.’

MSCI found this dynamic was also present among companies domiciled in countries where gender quotas for boards apply, with 18.6% and 13.5% of female and male directors, respectively, holding three or more directorships as of October 2019.

Overall, the report showed a ‘noticeable uptick’ during the year: 20% of directors were women in 2019, up from 17.9% in 2018 and 17.3% in 2017. This growth was primarily driven by increases in the US constituents of the MSCI World Index (26% in 2019 vs 23.4% the previous year).

This 2.1 percentage point increase slightly shortened the path to 30% female directorship, while is now projected for 2027, based on the latest data. At the current pace, a 50/50 gender split among global directors might be reached by 2044.

The number of companies with majority female boards doubled in 2019 compared with 2018. However, these 22 firms accounted for fewer than 1% of the constituents of MSCI index, and 98.7% of the boards remained male-dominated.

Overall, the portion of companies with all-male boards dropped from over 22.5% in 2017 to 18.6% in 2019, primarily driven by Japanese firms. Currently a third of Japanese firms in the index (33%) have all-male boards compared to 45% in 2018. Brazilian firms also added women to their boards. Of the 51 Brazilian firms in the peer set, 47% were all-male in 2018, compared with 29% this year.

Using its sample, MSCI calculates the UK has 31.7% of all director seats held by women, up from 29.1% in 2018.

MSCI world index 2019

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