This post appeared as part of Diligent Institute’s contribution to Insightia’s inaugural corporate governance report covering Australia. Read the full report here.

The benefits of diverse corporate leadership have been gaining traction across the world, with an increasing number of studies suggesting that a diverse board has the tendency to be more profitable for businesses worldwide. In June 2022, the Diligent Institute and Esade Centre for Corporate Governance published a report entitled Modern Governance and ESG: Connecting Board Effectiveness and ESG Maturity, examining 13 board effectiveness metrics at 5,295  global public companies

The findings suggest that board diversity demonstrates the highest correlation with a company’s environmental and social performance, implying that companies with a higher gender parity display a stronger correlation to better overall environmental and social performance.

Over the years, we have seen European countries such as France, Norway, and the U.K. implement legislation, quotas, and targets to strengthen gender diversity in boardrooms and we are now seeing this development take root in Asia-Pacific boardrooms.

In 2019, the fourth edition of the ASX listing rules was released, one section of which provided a list of enforceable advisory actions centered around gender diversity. Under the new policy, issuers were recommended to disclose their diversity policy as well as actionable goals to achieve gender diversity “in
the composition of its board, senior executives, and workforce generally.”

The latest edition, published January 1, also stipulates that “if the entity was in the S&P/ASX 300 index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its board should be to have not less than 30% of its directors (both executive and
non-executive) of each gender within a specified period.”

ASX 100 boards are leading the way in terms of diversity, with the communications sector featuring 43% female representation, followed in close second by both the utilities and consumer-staples sectors.

The initiative seems to be bearing fruit, with female directors holding approximately 35% of all ASX 300 board seats in 2022, compared to 23% in 2019. In the ASX 100, female directors hold approximately 37% of board seats, according to Diligent Compensation and Governance Intel data.

Evolving trends

The utility sector boasts the most diverse boards in the ASX 300, with an average of 41% gender diversity in 2022. The energy, materials, and consumer defense sectors showcased the lowest levels of board diversity, featuring between 30-31%female representation each.

Female directors on Australian public boards are, on average, three years younger than their male counterparts but 1.5 times more likely to be independent.

ASX 100 boards are leading the way in terms of diversity, with the communications sector featuring 43% female representation, followed in close second by both the utilities and consumer staples sectors at 41% diversity. The information technology sector lags behind with 31% gender diversity. Interestingly, female directors on Australian public boards are, on average, three years younger than their male counterparts but 1.5 times more likely to be independent, relative to their male counterparts. Approximately 64% of male directors on Australian boards are independent as of the end of 2022, compared to 87% of female directors.