Corporate boards are adding female directors at a ‘sluggish’ pace in the US and the country’s companies risk becoming less competitive internationally unless the pace accelerates, according to a study by Ernst & Young.
Women currently occupy 14 percent of seats on the boards of S&P 1500 companies, an increase from 11 percent in 2006, according to the study.
Although the number of boards with no female representation at all fell to 26 percent from 35 percent in that time, the Ernst & Young study shows that most new recruitment of women to boards occurs at companies that already have a higher degree of gender diversity.
‘The rate at which women are joining US boards is increasing. It is not, however, increasing at a pace that will result in clear strengthening of board diversity in the short term,’ state the study’s authors.
This is ‘despite an influx of affinity groups working to improve board diversity and increasing efforts by institutional investors to get women on boards. Companies are adding women to their boards – at a sluggish pace. To be globally competitive, we must do better.’
The study says proposed European Commission directives that 40 percent of non-executive board seats of large public companies be filled by women by 2020, and other voluntary or compulsory measures to boost board gender diversity elsewhere, may leave US boards further behind.
The study shows, however, that larger US companies are more likely to include women board members: while 26 percent of S&P 1500 companies lack any female representatives on their boards, only 10 percent of S&P 500 boards have no women.
The study also states that 4 percent of the companies studied had passed the ‘tipping point’ where at least one third of the board seats are occupied by women. It says these companies are from a variety of sectors, ranging from consumer products to media and entertainment to power, utilities and technology. These companies are also ‘going against the larger trend’ in that they are generally smaller companies, the study adds.
‘Board quality is strengthened when directors have a diversity of skill sets, expertise, experience and viewpoints that inform strategy development discussions and board oversight processes,’ says Allie Rutherford, associate director of the corporate governance group at Ernst & Young, in a statement.
‘Many boards that have recruited female directors recognize the value and impact diversity can have on board thinking and function.’
