When it comes to New Year's resolutions, socially conscious directors might consider tackling this trifecta: gender diversity, climate risk and sustainability-tied compensation.
These issues stood out in a recent Conference Board study, which looked at transparency and performance in select areas of S&P Global 1200 companies.
Gender diversity at the management and board levels
Only 12% of North American companies disclose the percentage of women in management positions. By comparison, European companies are almost four times more likely to report this information in their annual reports or sustainability reports.
The low levels of disclosure highlight an unflattering reality: Women hold just one in four management positions among North American companies. And while disclosure represents a step in the right direction, by no means will that alone move the diversity needle. Among European companies, where more than half report on this metric, women represent only about one in five management positions.
Directors should pay particular attention to imbalances between the median percentage of women in the overall workforce and the median percentage of women in management positions. For instance, data from the financial sector show a significant imbalance. Despite women accounting for 52% of the workforce among financial companies, women represent only 27% of management positions at these companies, a gap of 25 percentage points.
Diversity data for boardrooms is not any rosier. Today, women fill only one in five board seats among S&P Global 1200 companies. Even among health care companies, where on average women account for more than half of the workforce, women held only 20% of board seats. Given these figures, it comes as no surprise that the issue of board diversity is getting the attention of shareholders. Last year, for example, shareholders in the U.S. voted on eight proposals asking companies to prepare a report on steps toward increasing board diversity. Two of these shareholder proposals passed.
Directors can take a step toward improving board diversity by considering the "Every Other One" approach. Coined by the Committee for Economic Development, the approach entails appointing a woman to every other vacant board seat. By doing so, while retaining existing female directors, women can occupy about a third of corporate board seats in just a few years--certainly a step in the right direction.
Climate risk reporting