Compared to G20 and emerging market peer averages, South Africa is a global leader in gender diversity, with female representation on the boards of the country’s top 100 listed companies sitting at 29%. This is in relation to an average of 20% on major G20 exchanges and 12% in Japan, 10% for Shanghai and 7.4% in South Korea. South African women chair 11% of the companies, beating the G20 average of 5.5%.
However, while this representation among women in senior leadership positions in the country’s private sector is encouraging, we are still not where we should be, particularly when looking at the actions of other countries that are adopting more innovative ways to spur gender transformation.
SA’s gender representation is still unacceptably low and the rate of progress far too slow and this calls for an honest debate, across all industries, on the best ways to ensure deeper diversity, especially in light of the well-documented correlation between greater gender parity and business, industry and overall economic performance.
Specific charters across many local industries, such as mining and financial services, have contributed to the stronger female representation in South African listed companies, through the setting of targets for increasing gender representation. Companies are far more motivated when they are given a target to report against and it is with this accountability in mind that we believe that asset managers can play a critical role in driving change when it comes to gender parity within the companies they invest in.
Countries and industries that view gender diversity as important capture benefits from it. As an asset manager in search of returns, we see the strong correlation between the moral imperative for improved gender diversity and the positive impact that this has been proven to have on performance.
The more we support gender equality and the more we work to make it a reality within individual businesses, the greater the impact on growth, jobs and performance. Gender diversity forms an integral part of our Environmental, Social and Governance (ESG) investment approach when engaging with our investee companies. And through a programme of stewardship, we are committed to working with these companies to ensure better representation by women on their boards and management teams, as well as more transparency when it comes to reporting on gender diversity within their ranks.
There is also a role for legislation to play in expediting gender representation in local companies. Over the last five years, California, Netherlands, the United Kingdom and Norway have recently passed legislation successfully increasing female representation at senior management and board level.
In the same period, South Africa has increased female representation by only 5% at Board level. Countries promulgating legislation requiring 30% female Board representation, on the other hand, have moved the needle on gender diversity more effectively than South Africa over the same period.
However, while legislation could be a contributor in driving further commitment to gender equality from the private sector, the role of active stewardship with listed companies is as important in improving representation of women in leadership roles. While legislation does drive increased accountability from investee companies to drive change and encourage increased female representation on boards and leadership roles, increased representation alone is not enough.
A Credit Suisse report (2) records that even though Europe has more gender diversity legislation than North America or the Asia Pacific Region, these regions have achieved greater gender diversity than Europe – organically, without legislation. Legislation does not necessarily address the barriers holding women back from greater participation. Other structural factors such as embedded cultural attitudes, gender stereotyping, work-family role conflicts and a general lack of female role models all contribute to the low number of women in leadership roles across SA companies. These are issues that need to be addressed from within organisations and won’t be remedied through legislation.
There are real – and practical – steps that senior management and boards can take, right now, to improve gender diversity from within their organisations, such as sponsorship, mentoring and skills development programmes. These are just some of the tools that companies can use to achieve higher levels of performance and growth through effectively supported inclusion.
For gender diversity to truly be effective and to fully advocate the outcomes we expect, we need to recognise that, ultimately, the participation of women in the drive for gender parity is crucial. Women should be at the forefront of the solutions that drive the successful impact of gender diversity. A change in company mindset and organisational culture will go a long way towards the realisation of optimal diversity and equality in the private sector.
REFERENCES
1. Research: When Gender Diversity Makes Firms More Productive by Stephen Turban, Dan Wu, and Letian (LT) Zhang.
https://hbr.org/2019/02/research-when-gender-diversity-makes-firms-more-productive
2. Gender Diversity is Good for Business
Good progress for women, but still a way to go
Gender diversity in the boardroom has doubled during the decade to over 20%, a clear positive for governance. Additionally, the proportion of women in management has risen to 17% from 14% in the 2016 study. Regionally, North America (21%) and APAC (19%) reflect greater management diversity than Europe (17%). This is perhaps unexpected given the regulatory and policy focus upon quotas in the boardrooms in many European countries. North America and APAC have seen women in management increase more organically.