In 2012, women represented just 9% of Hang Seng Index-listed company boards in Hong Kong.
That same year, we were delighted to see positive steps being taken towards increasing the number of women on boards;
· Hong Kong Exchanges and Clearing issued a change to its corporate governance code to encourage companies to implement board diversity policies;
· TWF launched the Hong Kong Chapter of the 30% Club; and
· Investment banks, consulting firms and think tanks released studies that demonstrated the direct link between greater gender diversity and better business results and provided evidence that more diverse teams make better business decisions.
In short, the business case for gender diversity was made.
So, 5 years later, how we are performing?
Today, there are 13.3% women on boards of Hang Seng Index companies. Since the Exchange’s diversity policy was issued in 2012, we have seen an increase of women on boards of 4% over 5 years. That is only a 0.8% per annum increase! In a city that is so focused on returns, we are clearly underperforming. We challenge any banker in the city to try and spin that number!
But how do we fare compared to our global competitors? Despite incremental improvements, Hong Kong lags way behind other global financial centres. The UK and US surpassed the 20% mark long ago and are now at 26.7% and 23.1% respectively. Australia is at 25.4%. Just recently I met with several highly accomplished, female chief executives of financial institutions in Hong Kong and was shocked to hear that not one of them had been approached to sit on a Hong Kong listed company board. Not one! But amongst that group were women who had been approached by companies listed in London or New York keen to secure board ready, experienced, female directors in Asia.
So why is it that other markets like the UK and Australia perform better that Hong Kong on gender diversity? What are they doing that we aren’t?
One key difference is in regulatory frameworks. In other markets, regulations for board diversity are stronger and deeper. Regulators recognise that to achieve real change, businesses must be encouraged to build ecosystems that drive and foster gender diversity and that counter unconscious biases. To do this, regulators require companies to focus specifically on gender; to set targets for achieving gender diversity at the board and management levels; to set measurable objectives to achieve their goals; and to be accountable through regular and transparent reporting to the market.
This is how meaningful change happens. And we say the time has now come to bring this meaningful change to Hong Kong.
13.3% women on boards is simply not good enough. The value of diversity to business is no longer a question; it is a fact. The performance of our listed companies depends on it. The full participation of women in our society demands it.
As with any initiative that improves the bottom line paying lip service to diversity is not enough. We need a plan. We need to transform rhetoric into results and we can't do this alone.
At TWF, we thank Hong Kong Exchanges and Clearing for taking the important first step for board gender diversity back in 2012. But now, in 2017, we ask the Exchange:
· Isn’t it time to take the lead on this issue?
· Isn’t it time to critically review how our regulatory frameworks support gender diversity?
· Isn’t it time to require companies to focus specifically on gender in setting their board diversity policies? To require companies to include measurable objectives for change – at board and management level? To require a deeper level of accountability and reporting in order to drive real change on gender diversity, and deliver meaningful results for the good of Hong Kong?
We look forward to hearing from the Exchange in response to this call to action.
**This call to action was first delivered at TWF’s 30% Club Boardroom Lunch held on Friday, September 29. A huge thank you to all of our Lunch sponsors particularly our Title Sponsors - KPMG and Standard Chartered and our Associate Sponsor, Paul Weiss. For more on the Lunch and updates from 30% Club, please read our press release and infographic.**
Let us know what you think on this important issue. Get in touch at Fiona.Nott@twfhk.org
Have a wonderful Mid-Autumn Festival.