Multinational companies lead in women's representation on their boards

Women accounted for only 6% board seats for Nifty500 firms in March 2014. Sebi has mandated the appointment of independent women directors by March 2020 for the top 1,000 listed firms
The boards of multinational companies (MNCs) lead when it comes to representation of women, accounting for nearly a fifth (19 per cent) of positions.

Public sector firms, promoter-led firms, and those owned by institutions or are otherwise widely held, had between 11 and 18 per cent representation, showed the data from a study conducted by corporate governance firm Institutional Investor Advisory Services India (IiAS), in association with SBI Mutual Fund. 

The Securities and Exchange Board of India (Sebi) had mandated the appointment of independent women directors by March 2020 for the top 1,000 listed companies. Regulatory action may have helped representation increase, but women only accounted for only 6 per cent of board seats for Nifty500 companies in March 2014, showed the study. This has since risen to 17 per cent in March 2020.

Other countries have pushed for higher representation, noted the study, citing international data. France and Norway have mandatory 40 per cent board representation. The regulatory requirement in Austria, Belgium, the Netherlands, Italy, and Germany ranges between 30 and 40 per cent. The US has 27.7 per cent women on the boards of its 100 largest companies.

 

 
 “While at the board level, gender diversity is improving, one of the challenges that India and several other markets face is gender diversity at the leadership and middle-management levels. This is a critical fix that Corporate India needs to address: It is only then that gender diversity at the board level will become a natural outcome, rather than a focused fix,” said the report.

Few women lead company boards. A total of 491 companies of the Nifty500 companies under consideration had chairpersons. Only 18 of them were women. Key decision-making committees have shown some rise in representation. The nomination and remuneration committees had 18 per cent women’s representation. Corporate social responsibility and audit had 16 per cent.

Women directors are typically younger than their male counterparts. The average age for a woman director is 56 years. It is 61 years for men. The average tenure is 4.8 years for women, while it is 8.7 years for men.

The report also noted a skew in gender among very young directors on the boards of Indian companies.

“There are 16 directorships held by directors under the age of 30, all of whom belonging to the promoter group. Of these 16 directorships, 10 are held by men, suggesting that men from the promoter family tend to start early on the board, considering India is still a patriarchal society,” it said.

Previous analysis by index provider MSCI has shown that diversity among employees and the board also leads to diversity in ideas and better financial performance among international firms.  Such firms have higher returns on equity too, it noted.


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