Gender diversity on corporate Boards of Directors

In the last decade, the board of directors has taken on an expanded role and presents an interest in all stakeholder groups, with an increasing number of women serving now as members. This corporate change of culture is more and more in line with the UN Sustainable Development Goals (SDGs), which state that ‘ Gender equality is a necessary foundation for a peaceful, prosperous and sustainable world’.

Even though regulatory frameworks have been a driving force towards increasing gender diversity within companies, according to Global Gender Gap Report 2021, there is still a lack of women in leadership positions. Right now, they represent only 27% of all manager positions.

Advancing gender equity has recently been high on the agenda for development funders, too. Two recent surveys from the Morgan Stanley Institute for Sustainable Investing present that 63% of US individual investors and 67% of global asset owners identify gender diversity as an area of interest in allocating capital across their investment portfolios. Especially in US, investors play a significant role on gender equality as they have been very focused on disclosure of relevant policies and employee diversity statistics.

Why may gender diversity lead to better returns for investors? Here are a few possible reasons:

• There seems to be a strong correlation between gender diversity and employee engagement for all employees, not just women.
• Gender diversity on boards of directors help companies attract top talent employees and be more competitive.
• Innovation can arise from diverse perspectives and it is possible for companies to add new revenue sources.
• Many investors seek to avoid reputational risks. Even though such issues can happen even at diverse workplaces, the possibility decreases.

Having more women in leadership can diminish the negative stereotypes around women’s ability to lead and thanks to investors’ demand for increased data and transparency, there is still room for advancing gender diversity.

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