New report shows having a diversity policy is not enough to drive change

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A report by KPMG for the ASX Corporate Governance Council released this week revealed that while an increasing number of entities are adopting diversity policies, very few have set quantitative targets for gender diversity and this is slowing progress.

The report analysed listed company disclosures on diversity and revealed a number of trends and issues for gender diversity.

DCA’s CEO, Lisa Annese, said that this report clearly shows that numerical targets work and are exceedingly effective at achieving change.

“The report findings show that companies that set and disclose quantitative targets had a higher level of gender diversity than entities that did not. If companies are serious about change, it is pretty clear that they need to set targets and hold their people accountable for achieving them.

“The overall increase in the percentage of women on boards is good news but ASX 501+ companies are falling further behind with a reduction of 33% in female representation on their boards.  It does not bode well for the future that so few directors in these smaller publically listed organisations are women.

“Overall, the slow pace of change in the past four years highlights the urgent need for entities to rethink their approach to achieving greater gender diversity at senior levels,” said Lisa.

Key findings:

  • More entities have diversity policies but they lack quantitative objectives:
    Although more entities have implemented diversity policies, these lack quantitative objectives (e.g. 30% director seats held by women by 2018). Instead the majority of measureable objectives focused on implementing diversity policies or initiatives or reporting ‘aspirational’ targets such as ‘achieving a culture of inclusion’.
  • Increasing proportion of women on boards except for ASX 501+ companies:
    Overall, there has been a slight increase in the proportion of women on boards. But ASX 501+ companies are falling behind with the percentage of women on their boards actually falling in the past two years (from 9% to 6%).
  • Increasing number of senior executive women limited to traditionally female domains:
    There has been a slow and steady increase in women’s representation in senior executive roles, particularly in HR and General Counsel. However, the lack of female representation in key operation roles such as COO or CFO positions negatively affects the pipeline for female CEOs and the gender pay gap.
  • Increasing disclosure overall but many boards still without any women:
    There was a notable increase in the overall number of entities that publically disclosed their diversity policy or summary of the policy. But in the ASX 501+ category in particular, there is a lack of action with 77% reporting they did not have any women on their boards.
  • Growing focus beyond gender but no measurable objectives yet:
    Some entities, particularly in the S&P/ASX 200, have developed policies and programs to address diversity issues beyond gender, in particular age and ethnicity. But few have developed or disclosed measurable objectives for achieving improvements a broader spectrum of diversity.

DCA members can access a summary of the report findings in the members-only area of the website.