Women on boards: Hong Kong exchange wants to end all-male boardrooms, quicken progress on gender diversity in ESG shakeup

Hong Kong was among a few markets where the number of all-male boards increased in 2020, according to a report published by MSCI

Some associations are opposing the mandatory approach, calling it ‘not ideal’ and saying time is needed to explain difficulties in certain industries

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Asian businesswomen in boardroom meeting. Photo: Shutterstock

Published: 12:40pm, 14 Jun 2021Updated: 11:01am, 21 Jun 2021

About one-third of Hong Kong-listed companies will need to appoint at least one woman director by 2025 or face a penalty under a stock exchange proposal to catch up with progress in gender diversity efforts elsewhere. It can expect some strong opposition.

The proposal, which forms part of new environment, social and governance (ESG) rules put forth by Hong Kong Exchanges and Clearing (HKEX), also requires all new listing candidates to have at least one woman on their boards at the time of going public. Existing listed entities will be given a three-year window to comply.

A two-month consultation process will end on June 18 and both requirements are deemed controversial as they could be implemented from January 1, 2022. The exchange, disappointed with the current rate by listed companies, is also seeking mandatory disclosure on the progress leading to their numerical targets and timelines at board-level and across workforce.

“Diversity is an important driver of the board’s effectiveness,” the exchange said, according to the consultation paper. “It brings unique perspectives to the boardroom and enhances board performance” and single-gender boards are “not acceptable,” it added.

Pedestrians in face masks are seen outside the HKEX’s headquarters at Exchange Square in Central, Hong Kong. Photo: Sam Tsang

While Hong Kong prides itself as the third-largest stock market in Asia-Pacific and a favourite listing venue over the past decade or so, representation of women in corporate boardrooms left much to be desired and lagged behind some emerging and developed markets.

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