There is strong business case and growing body of research that shows that gender diverse boards and management teams are good for business. Diverse boards are also a proxy for, and a visible indicator of, high quality corporate governance.
But for too long Hong Kong has lagged far behind other global financial centres and increasingly behind our Asia neighbours.
There are only 13.7% women on the boards of Hang Seng Index companies. Approximately one third of all listed companies are still without a single woman on their boards.
The time for action is now. We welcome Hong Kong Exchanges and Clearing’s (HKEX) Consultation Paper on the Review of the Corporate Governance Code covering a range of important corporate governance issues including board gender diversity and a number of our long-term advocacy areas. Single gender boards will no longer be acceptable (with a 3-year transition period) and companies are asked to set targets and timelines for gender diversity at board level and across the workforce.
We support many of the proposals but believe bolder reform is needed to achieve real progress. Without this, Hong Kong will continue to lag behind other markets with respect to board gender diversity.
We must aim for 50% women on boards. To get there, we need meaningful targets which, if not met, should be mandated through quotas. We have serious concerns that eliminating single gender boards without setting wholesale targets may result in companies only appointing one woman per board - in effect “a quota of one”. Given the breadth of female talent in Hong Kong we believe a 3-year transition period to eliminate single gender boards is unnecessary and risks further delaying Hong Kong’s progress.
We strongly urge HKEX to include the following elements in the Corporate Governance Code:
1. set board gender diversity targets for all listed companies of 25% by 2025 and 30% within six years which, if not met by 80% of the market, should be mandated through quotas;
2. diversity policies should apply throughout organisations and not just the board; and
3. diversity policies should include measurable objectives and create accountability through transparent reporting to the market.
We believe that these recommendations will bring Hong Kong into alignment with other global financial centres and maintain Hong Kong’s position and reputation as a leading global financial centre.
TWF and the 30% Club HK will be responding to the Consultation separately. We urge each of you to carefully read the Consultation and submit your organisation’s and / or your individual responses on or before Friday, June 18, 2021.
See the summary of our main points. Please use any of our material as a foundation for your response. Even if you fully agree with our recommendations, we suggest to edit your answers slightly, to ensure that the wording is different enough to be accepted by HKEX. Otherwise, it will be treated as one submission and have less impact with the regulator.
It’s time to act to bring meaningful change to Hong Kong.
Get in touch at Fiona.Nott@twfhk.org.