Female representation on boards may have reached the target of 30% in ASX 200 companies, but maintaining board diversity will be an important focus, says AICD head of Advocacy, Louise Petschler.
In December, the AICD announced that for the first time, women held 30 per cent of all ASX 200 company board positions. This represents a substantial milestone for Australia’s largest listed companies — one that reflects the commitment of their chairs, directors, investors and stakeholders to more diverse boards. And it marks a decade of significant change. In 2010, when the AICD began collecting statistics on gender diversity on boards, women held just eight per cent of the seats in ASX 200 boardrooms.
In 2015, the AICD backed the launch of the Australian chapter of the 30% Club and called for ASX 200 boards to achieve a minimum of 30 per cent female representation within three years. While it’s taken a year longer than that ambitious time frame there is a lot to celebrate in this progress, most significantly the efforts of ASX 200 chairs and boards directly, and also those of many stakeholders.
The AICD has consistently argued that board diversity is a positive contributor to good governance. A diverse mix of views and perspectives around the table increases board performance and reduces the risk of groupthink. Our support for change has included maintaining quarterly reporting on progress, the launch of the AICD Chairs Mentoring Program in 2017, working with the 30% Club, research on practice and policy, governance scholarships and ongoing engagement with the ASX director community.
Where to from here?
The challenge is to maintain momentum to make sure the minimum target “sticks” and encourage other organisations to achieve the target. The AICD considers a 40 male/40 female/20 other gender diversity model to be good practice for all boards, with 30 per cent as the minimum target for female representation.
The 30% Club has extended its focus to the ASX 300, advocating for 30 per cent female directors by the end of 2021. Of course, diversity is a much broader issue than gender diversity alone, and a focus on board diversity must have as its starting point the board having the requisite skills, experience and expertise to fulfil its governance obligations. Board diversity will continue to be an important focus for the AICD in our advocacy program. More about board gender diversity at here.
2020 regulatory priorities
Directors can expect the year ahead to bring a continuing focus on governance practice by regulators, policymakers and the broader community. Many of the areas receiving scrutiny will have implications for directors across all sectors, from the expectations on boards in governing remuneration and culture, to reforms to strengthen individual accountability for corporate wrongdoing. Along with the core issues of directors’ duties, new expectations on board governance of modern slavery risks, climate change risks and transparency will also influence the regulatory environment.
The AICD will continue to promote evidence-based, pragmatic policy that considers director and stakeholder perspectives and promotes good governance outcomes. The AICD will also progress our Forward Governance Agenda to support better practice and targeted reform in governance hotspots such as accountability, culture and consideration of stakeholder impacts.
Some examples of areas of focus for the AICD’s Advocacy team as we enter 2020 are set out on table above. We will update members on substantial issues through Company Director, the monthly Membership Update and Boardroom Report e-newsletters, and the AICD website.
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