No. CCXXIII; November 30, 2020
THIS ISSUE’S HIGHLIGHTS

I.GERMANY MAKES HISTORY WITH QUOTA FOR WOMEN IN SENIOR MANAGEMENT
II. ASIA-PACIFIC CONTINUES TO LAG IN APPOINTING WOMEN DIRECTORS
III. U.S. WOMEN IN CONGRESS STILL TRAIL MUCH OF WORLD

I.GERMANY MAKES HISTORY WITH QUOTA FOR WOMEN IN SENIOR MANAGEMENT

Germany introduced a mandatory quota for women in senior management in the country’s listed companies, the first instance of a country requiring women in top executive leadership. The governing coalition agreed that Management Boards with more than three members must include at least one woman. In addition, the agreement dictates that state-owned companies (companies in which the government holds a majority stake) must have women holding at least 30% of seats on the Supervisory Board.  (Germany is one of few countries with two-tiered boards unlike the unitary boards in place in most economies.)

Franziska Giffey, Germany’s Minister for Family Affairs, Senior Citizens, Women and Youth, described the decision as a “historic breakthrough” and said, “We are putting an end to women-free boardrooms at large companies.”

Women currently only make up 12.8% of Management Boards of the DAX 30, the companies in Germany’s blue-chip index, according to a recent survey by the AllBright Foundation. The number of women in these executive roles declined from 29 to 23 over the past year, highlighting the failure of companies’ voluntary initiatives and the need for more aggressive measures. (The Guardian, “Germany agrees ‘historic’ mandatory boardroom quota for women,” November 22, 2020)

This current legislation follows a quota passed in 2015 requiring listed companies to have at least 30% women on their Supervisory Boards while recommending voluntary targets for female participation in management positions.  While the mandate for women on Supervisory Boards succeeded (currently at 36.3% women directors), the voluntary commitment for companies to add women to their Management Board largely failed.  “Change doesn’t happen without pressure,” states Irene Natividad, Chair of Corporate Women Directors International, “and quotas mean that pressure comes from a law.”

II. ASIA-PACIFIC CONTINUES TO LAG IN APPOINTING WOMEN DIRECTORS

While Germany and many other economies have accelerated women’s access to corporate leadership, the Asia-Pacific region, despite a few exceptions, has been much slower in addressing this issue.  According to a new report from the Corporate Women Directors International (CWDI – the research arm of the Global Summit of Women), only 15.1% of directors in 1,570 of the largest publicly-listed companies based in 20 economies in the region are women.

Where there has been some progress is in countries which have adopted national strategies to speed up gender diversity on corporate boards. Four economies in the region have now adopted mandates or quotas – Malaysia, India, Pakistan and, most recently, South Korea. This resulted in significant increases in women’s board representation in these economies (excepting South Korea whose quota just passed in 2020). Malaysia’s 30% quota goal in 2011 experienced the largest increase from 7.6% to 26.4% in 2020. India tripled the number of women directors with its 2014 quota from 5.1% to 15.7% , while Pakistan doubled its numbers with its 2017 mandate from 5.5% to 11.2%. Both economies required at least one woman director in listed companies.

Four other economies — Australia, New Zealand, Singapore and Japan — have implemented private sector initiatives adding gender diversity into their corporate governance codes. Australia’s Securities Exchange initiated this strategy in 2011, making board diversity a listing requirement, thus increasing its percentage of women directors from 8.6% to 33.1% – the highest percentage in the region.

“What this shows, says CWDI Chair Irene Natividad, “is that change doesn’t happen on its own. For more women to get into the boardroom, actions by both the public and private sectors – whether quotas, targets or good governance principles – are needed as demonstrated by these eight economies.”

For more key findings from the CWDI Report, visit www.globewomen.org/CWDInet

Following the release of this report last week, a virtual forum was held with corporate governance experts and male CEOs providing their perspectives on the report. Former Chair of Malaysia’s Securities Commission Zarinah Anwar, former President of the Stock Exchange of Thailand Kesara Manchusree, and Vice Chair of Goldman Sachs Japan Kathy Matsui served as panelists during the discussion with moderator Angela Mackay, Managing Director of FT Asia Pacific.  A separate panel with CEO of 3M Korea Jim Falteisek and CEO of MetLife Asia Kishore Ponnavolu followed in which they also discussed workplace gender diversity.

Watch CWDI Chair Irene Natividad release the report and the responses from the two panels here.        

III. U.S. WOMEN IN CONGRESS STILL TRAIL MUCH OF WORLD

The U.S. election earlier in November not only resulted in the first woman Vice President, Kamala Harris, but also saw another increase in the number of women legislators.  The 2020 election marked the 15^th time in past 16 Congressional elections in which the number of women members has increased. However, women still only account for 25.2% of the U.S. Congress, a slight increase from 23.7% after the 2018 elections. (BBC, “Women continue to change the face of US politics,” 11/10/20)

The U.S. female Congressional delegation is far below the global leader, Rwanda, where 61% of the seats in its Lower House are occupied by women. Among its peers in the OECD, the U.S. also continues to lag, with the 37 OECD countries averaging 31% women’s Parliamentary representation.

Compared to the slow but steady increase in the U.S., New Zealand saw a large jump in the number of elected women in its recent election, which saw Prime Minister Jacinda Ardern re-elected in a landslide.  The October elections resulted in 48% of New Zealand’s legislature composed of women.  This is 10 percentage points more than after the 2017 Parliamentary elections, when women held 38% of seats in Parliament.

Having a female head of government with a high percentage of female lawmakers is not unusual.  In the OECD countries with a woman head of government, the overall percentage of women lawmakers is higher than the 31% average.  In addition to New Zealand, these countries include Finland with 46% women in the legislature led by Prime Minister Sanna Marin, Switzerland with 42% women legislators led by President Simoneta Sommaruga, and Norway with 41% women legislators led by Prime Minister Erna Solberg. (CNN, “New Zealand has just elected one of the most diverse parliaments in the world,” 11/16/20)

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