Equality in the Boardroom Essential to Corporate Success

As we approach the 6 month review date (24 August, 2011) outlined in the February 2011 Lord Davies report, the focus of the debate is continuing to head towards quotas.

The EU Justice Commissioner Vivienne Redding challenged publicly listed companies in Europe to sign a ‘Women on the Board Pledge for Europe’ by March 2012, pledging a voluntary commitment to increase women’s presence on corporate boards to 30% by 2015 and to 40% by 2020.

The EU further launched a public consultation on 5 April 2011 addressing the ways in which corporate governance of European companies can be improved and made more effective, covering a multitude of issues such as how to improve the diversity and functioning of the boards of directors and the monitoring and enforcement of existing national corporate governance codes.

There are some very encouraging signs, with women currently making up 30% of new appointments in FTSE 100’s and high profile companies. However there has been much less change in the composition of FTSE 350 and AIM companies, with little evidence to suggest that this trend is changing.

FTSE 100 companies were already at 12.5% female representation on their boards, compared with just 7.8% in the FTSE 250, and it is likely that this gap will widen significantly over the next year unless there is radical change.

These figures really blow apart the ‘lack of supply’ argument which claims there are insufficient women who have the right experience and skill set. If that was true then logically it would be even more difficult for larger companies to make female board appointments and the figures would be reversed.

Quotas would ensure that this wealth of female talent is used and not ignored, securing some balance in the process.

The public sector has tackled the diversity issue very successfully, but many companies still need scrutiny, challenge and a sharp focus to embrace the Davies report and deliver real change.

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