Boys’ club: Hong Kong board rooms lag behind the world in women’s representation
Women directors make up 11.6 per cent of Hang Seng Index members’ boards, fewer than the world average
The board rooms of Hong Kong’s largest publicly traded companies are so dominated by men that the city’s corporate gender diversity ratio is worse than the world average, according to the 30% Club, an advocacy group founded to encourage the participation of women.
Of the 50 component stocks of the hang Seng Index, only two companies -- HSBC and Link Reit -- meet the 30% Club’s target of having women as a third of their directors. Twelve of the HSI constituent companies don’t have any women among their directors.
The 30% Club, founded in 2013 with the objective of prodding members to improve their gender diversity, wants women to make up at least 20 per cent of their members’ boards by 2020. It wants 12 companies currently with all-men directors to appoint at least one woman on each board by 2018.
“Diversity of thought, proper risk management and good decision-making are by-products of healthy, diverse boards. The best listed companies should therefore plan ahead for board rotations, vacancies and be sure that a qualified slate of competent directors of both genders is considered,” said Rosanna Wong Yick-ming, an independent director of Hongkong & Shanghai Banking Corp., who also sits on the boards of CK Hutchison Holdings, and The Hongkong & Shanghai Hotel Co. “I would like to see Hong Kong lead by example.”
The worldwide female representation improved slightly to 14.7 per cent of boards of directors on average at the end of 2015, according to Credit Suisse’s data, led by Norway at 46.7 per cent. France was second at 34 per cent, Sweden was third at 33.6 per cent, followed by Italy at 30.8 per cent and Finland at 30.8 per cent.
Hong Kong’s 2015 ratio was below the world average at 11.4 per cent, even if gender diversity had improved from 10.6 per cent in 2014 and 8.9 per cent in 2010, according to the data. It stands at 11.6 per cent as at the end of September.
In Britain, 26 per cent of FTSE-100 index member companies’ board seats were held by women, while the ratio was 23.3 per cent among S&P100 constituents in the US, and 23.8 per cent of ASX-200 stocks in Australia.
“If Hong Kong aspires to remain as an international financial centre, it needs to ensure it’s tapping the entire talent pool, particularly for leadership roles,” said Tim Payne, senior partner and head of Asia at Brunswick Group, who also co-chairs the steering group of the 30% Club.
“Prominent Hong Kong-listed companies need to lead the way on this issue, embracing diversity as an important measure of good governance. Diverse boards drive better business and that leads to stronger performance, improved returns and enhanced reputation,” Payne said.
Gender diversity was a boon to share price performance, as companies with women directors outperformed a declining stock market between the end of 2013 and the middle of 2016, Credit Suisse said. Stocks of companies with 25 per cent female board representation rose 2.8 per cent during the period. Those with 33 per cent female rose 4.8 per cent while listed companies with 50 per cent women directors reported 10.3 per cent share price growth, compared with a 1 per cent decline in the index.