To improve profits Hong Kong companies need to bolster the representation of women at the board level
Fund managers and legal professionals have joined a worldwide campaign to support more women on Hong Kong corporate boards, in the belief that diversity is not just for social equity, but also profit.
David Smith, head of corporate governance of Aberdeen Asset Management, is among finance industry professionals who supports the 30% Club, an international organisation that supports enhanced representation of women in the corporate world.
“We strongly believe it is important to have a board of directors which represents a diversity of gender, knowledge and background,” Smith said in an interview with the Post.
“Male, pale and stale are the words to describe many company boards,” Smith said.
He said diversity should also apply to professional experience when selecting appropriate candidates.
“Image if we have a board of directors of six directors - three men and three women, but then they are all lawyers. They would tend to think alike because of their profession,” he said.
Smith said he encourages senior managers of companies to keep diversity issues in mind when choosing among candidates for directors.
For example, he praised DBS Bank for appointing to its board a former head of food company Unilever, which operates well known brands such as Knorr and Lipton. The appointment would likely help the bank to better understand its customers in the food industry.
“Companies should appoint directors who have skill sets that are tailor made for the needs of the company. A company that focus on female customers should have more women on board,” he said.
“Diversity is not just a social equity issueas studies show that companies that embrace social responsibility have better profitability,” Smith said.
He cited a report by Deutche Asset & Wealth Management and the University of Hamburg, which surveyed more than 2,000 companies worldwide. It found that 63 per cent of the companies surveyed had a positive correlation between financial performance and commitments to social responsibility.
Meanwhile, Hong Kong lags behind other leading financial hubs in terms of gender diversity, with a disproportionate number of males occupying board seats.
Among Hong Kong companies women occupy 11.6 per cent of board positions, according to September data compiled by the 30% Club. That compares to 26 per cent in Britain, and 23 per cent in the US and Australia.
Hong Kong Investment Funds Association chief executive Sally Wong agreed that greater board diversity should be viewed as a strategic asset.
“Greater diversity will increase the depth and breadth of the discussions and enable the company to capitalise on the expertise from a broader spectrum,” Wong said.
But Wong said she did not support the view that there should be specific targets for gender representation.
“We don’t have a magic number. We believe that this is something that should be best left with individual companies to consider, taking into account the characteristics and practical condition of the relevant industry or sector,” she said.
Wong said another consideration was how to identify and nurture suitable management candidates.
“It is important that there should be a structured approach to groom the potential candidates, to provide on-going support, both on the hard and soft skills for board directorship,” she said.
Claudia Prado, global executive committee member and chair of the Latin American region of international legal firm Baker & McKenzie, said her firm has made gender diversity a core value.
Prado who heads up Baker’s Diversity and Inclusion initiative said that in Brazil, where she is based, 55 per cent of the partners are women. On a global level, 25 per cent of partners in Baker & McKenzie are women, well above the industry average.
“We believe that diversity of gender, ethnic origin, cultural background and sexual orientation allows us to attract a wider pool of talent. It also helps ensure that our firm has the right mix of talent who understand the different demands of our clients, so that we can provide a better service for them,” she said during an interview in Hong Kong.
“Diversity is not just for equality alone, but it also helps improve our productivity and ultimately the profitability of our firm,” Prado said.