Women gain ground in the boardroom, holding 29% of director seats in 2022
Thomas Barwick | Stone | Getty Images
Even though evidence shows that women hold less than one third of all corporate boards, there is still evidence to suggest that having more diversity on the boardroom can result in better credit ratings and stock performance.
The boardroom is seeing more women. According to Moody’s Investors Service, in 2022 29% of North American and European corporate boards were held by women. This is an increase from 24% just two years ago. The data revealed that 27% more board seats were held by women in North American businesses than 22%.
The company board can have a major influence on the company’s operations. This includes setting policies, hiring executive staff, supervising assets, and overseeing their finances. According to Moody’s, a higher percentage of women in boards correlates with better credit ratings.
“We consider the presence of women on boards – and the diversity of opinion they bring – as being supportive of good corporate governance, which is positive for credit quality,” the ratings agency said.
Anecdotally the stock prices of companies that have low representation from women on their boards are underperforming.
Canadian oilfield service company Calfrac Well Services, natural gas producer Canacol EnergyOntario-based Morguard Real Estate Investment TrustDoug Morrow (director of ESG strategy, BMO Capital Markets), stated that these companies are among the most gender-diverse. They have all-male executive boards and teams. These three companies have all fallen short of their industry benchmarks over the last year.
Morrow stated that “despite the lack of any clear correlation between stock returns and gender diversity, we believe diverse organizations offer intrinsic advantages over nondiverse ones” and were better able to compete over the long-term.
Over the years, government mandates and large institutional investors pressured for gender diversity at board level have encouraged it.
California’s 600 public corporations are required by law to include at least two women on the boards. Otherwise, they can be subject to a $300,000. Vanguard, one of the biggest institutional investors in America, is among them. BlackRockHave a history of voting against all-male board directors.
The Securities and Exchange Commission is in the interim approved new Nasdaq rulesThe majority of U.S. companies will need at least one female director and another who is a member or LGBTQ member of their board.
Historically, however, women still trail men when it comes to power and influence at the board level. This is especially true for energy resources and other natural resource industries.
Morrow said, “Improving diversity and mining have been a challenge for a long time, and it isn’t obvious that the statusquo has changed significantly in recent years.”