Firms outperform when there are more women on boards, research shows

NEW YORK – Female representation in the boardroom has almost tripled since 2010, with the most gender-diverse companies delivering higher shareholder returns compared with male-dominated boards, according to Bloomberg Intelligence. 

Women made up 26 per cent of boards in 2023, up from 9 per cent in 2010, highlighting how regulations in Europe, US and Asia that compel change are impacting global corporations, a Bloomberg Intelligence report released on Dec 9 showed. 

The top 20 per cent of companies for female board membership returned 2 per cent to 5 per cent more than the bottom 20 per cent in developed markets, the report said.

In emerging markets, they were 2 per cent to 6 per cent less volatile than their diversity laggards, according to the research. 

“Whether you believe that diversity is a moral imperative or not, at the end of the day, the higher performance linked to higher diversity shows it has a financial and business case,” Bloomberg Intelligence’s chief environmental, social, and governance strategist Adeline Diab said on Bloomberg TV. “This should bolster D&I (diversity and inclusion) programmes.”

Global exchanges from Hong Kong to the European Union to Japan have all placed requirements on companies to diversify their boards between now and 2030.

Even in the US, where there is growing backlash against diversity practices from conservative politicians and lawyers, companies are under pressure to add more women. 

Women made strides in UK C-Suites but not in CEO roles

The average share of women on boards on the S&P 500 hovers at around 35 per cent, data compiled by Bloomberg shows. It exceeds 40 per cent in some European countries with diversity quotas, the data shows.

Still, gains in the boardroom remain less evident in the top job; women make up less than 10 per cent of chief executives in the S&P 500, data compiled by Bloomberg shows.

Globally, women are most well-represented in chief financial officer roles, though men still outnumber them by five times, Bloomberg Intelligence found. 

The report forecasts women to reach boardroom parity in Western markets before the next decade.

However, there is a risk that the same women will be asked to serve on too many boards, which is happening in Asia and is a growing concern in the US and Europe, the report found.

The biggest headwind remains the growing backlash against diversity, equity and inclusion programmes, which US President-elect Donald Trump has pledged to curtail as he creates a cabinet hostile to diversity initiatives.

At the same time, social media pressure is prompting companies to backtrack even without government action, the report said. BLOOMBERG