Additional pressure to diversify comes from mandatory and voluntary government interventions. Several European countries have imposed mandatory quotas for female representation on boards, and the European Parliament voted for and is pressing the Council of the EU to adopt a directive calling for a minimum 40% representation of each gender among non-executive board directors by 2040. Outside of Europe, certain governments, including Australia, India, Israel and Kenya, have enforced legislative requirements for women on boards.
In recognition of the vital role the executive search profession plays in diversifying corporate leadership, dozens of the world’s leading firms have become signatories to a voluntary code of conduct, which recognizes the role that executive search firms play in helping clients find and recruit women to serve on their boards and in the executive pipeline.
The “30% Club” movement to place more women on corporate boards began in the UK but now includes CEO and Board Chair members in key markets around the world – including Hong Kong, East Africa, United States, Ireland, Southern Africa, Australia, and Malaysia. Helena Morrissey, the founder of The 30% Club and chief executive of Newton Investment Management, opposes quotas, which she finds patronizing, and instead is effectively convincing board chairs to lead the change, citing evidence that more diverse boards provide better shareholder returns.
To meet emerging demand for gender diverse boards from business leaders, regulators and governments, the AESC is a member of The 30% Club and partners with various organizations supporting diversity in leadership, including Women Corporate Directors, Global Board Ready Women, and a range of leading business schools.
Male and female directors have differing views about the importance of having gender and racial diversity on their boards. Female directors are far more likely to consider board diversity important. For example, 61% of female directors describe gender diversity as very important, compared to only 32% of male directors. Similarly, 42% of female directors describe racial diversity as very important, compared to only 24% of their male counterparts. These differences may be contributing factors to why diversity on public company boards has not increased substantially in the last five years.
Shareholders, institutional investors and customers are increasingly urging boards to diversify. They understand the business value that a diverse board delivers in terms of business strategy and shareholder value.