I have written recently about my frustration in the setbacks we have seen towards building greater gender equality in the workplace as a result of the pandemic. Clearly there is much for businesses to do to achieve parity while also continuing to fight the forces of disruption.
However, it is not all doom and gloom – research from Russell Reynolds earlier this year shone a light on the significant strides being made in the area of ESG appointments. The study points to the fact that 70% of recently appointed senior ESG leaders are female – a fantastic figure when compared with the continued under-representation at board level.
ESG is a critical function for female empowerment at the top
This data point shows just how critical ESG functions will be in the future in building greater diversity in the C-suite. If further evidence were required, a report by Credit Suisse in September also found that women are more likely than men to be appointed to head of sustainability roles. Of the 600 companies in their data set who stated that they have a dedicated sustainability officer in the senior management team (from a total of 3,000), 45% of all such positions were currently filled by women. Female directorships as a whole still track a way behind this; for example, at just 10.7% in Japan, 28.2% in the US, and 34.3% in the UK in 2020. France came closest to matching the headline head of sustainability trend at 43.3%.
This route to the boardroom will play an important role in helping businesses fulfil ESG goals around gender diversity as scrutiny intensifies. The UK’s 2018 Corporate Governance Code already requires that companies report on the gender balance of those in senior management and their direct reports, while more recently the Stock Exchange of Hong Kong’s (SEKH) published amendments to its Corporate Governance Code and Listing Rules, which included a veto of single-gender boards among listed companies and future IPO applicants, and will require disclosure of gender diversity information and plan from the beginning of 2022.
Greater gender diversity brings broader business benefits
For some businesses, greater gender diversity at the top is already helping them fulfil their wider ESG goals. A study by BloombergNEF and The Sasakawa Peace Foundation at the end of 2020 found that there was a positive correlation with better climate governance and innovation in the global electric utilities, oil and gas, and mining sectors over the last four years if a third or more of a corporate board were women.
Other studies have also shown that gender diversity, especially at board level, is good for business performance. For example, research published in 2020 from Glasgow Caledonian and De Montfort universities revealed that FTSE100 companies with three or more female directors significantly outperformed those with less diverse boards in the analysis period between 2005 and 2016.
The “softer side of business” is now at the forefront in delivering value
The evidence points to a something of a win-win situation for those businesses that are on the right track. Unfortunately, too few are, even now. Despite the positive message from the BloombergNEF study mentioned above, only 16% of the 11,700 companies analysed globally could demonstrate the level of representation to capitalise on the ESG benefits that could be realised.
However, positive ESG performance by its very nature demands diversity, and I am still greatly buoyed by the fact that this business area is proving such fertile ground for female representation.
Perhaps in the past, ESG may have been perceived as the “softer side of business” and therefore more likely to have accounted for a greater female cohort. Now, though, we are seeing many of the women who forged their careers during the early days of this emerging business component thrust to the forefront of the post-pandemic business agenda, highly skilled and experienced in articulating and delivering upon a much broader definition of “business value”.