In preparation for the November 2011 Summit which resulted in the formation of the Thirty Percent
Coalition, Vicki Kramer, Principal, V. Kramer & Associates and Co-Founder of InterOrganization
Network (ION) and Toni Wolfman, Executive Advisor, Bentley University’s Center for Women and
Business; and Co-Founder of InterOrganization Network (ION) prepared a summary of the work that
has taken place to increase the representation of women on corporate boards over the past decade.
MAJOR APPROACHES TO MAKING CHANGE
Work to increase the representation of women on corporate boards has fallen into three major
categories:
I. Tracking and reporting on the numbers and benchmarking best practices; conducting research
and making the business case for gender diversity on boards;
II. Initiatives to influence the supply side of the issue by trying to increase the number of qualified
women and make them more accessible; and
III. Initiatives to influence the demand side by trying to change the practices of corporations and their
boards.
I. Tracking and reporting on the numbers and benchmarking best practices; conducting
research and making the business case for gender diversity on boards in the United States
and abroad: initial results and then stagnation
For at least the past 15 years, Catalyst has been tracking the numbers of women on boards of the
largest U.S. companies and for the past seven years ION has tracked the numbers in the regions
where ION member organizations are located around the US (including companies smaller than the
F500 or F1000, Catalyst’s target group). Abroad, organizations have also been reporting on the
numbers in their countries. In 2010 and again in 2011 Corporate Women Directors International
(CWDI) reported on comparative numbers internationally; Governance Metrics International (GMI)
has reported for the last three years on the global numbers; and Catalyst has also charted the
comparative picture of progress in relevant countries, including the U.S.
For at least 10 years, organizations and individuals have also conducted research, issued reports, and
published books and articles documenting the barriers to women in the boardroom and developing the
business case for women on boards. The pace of research to demonstrate the business case and the
importance of moving beyond tokenism has accelerated in the past five years and gotten significant
exposure in business publications, board-specific journals (see for example Corporate Board
Member, Jan/Feb 2009, “Getting Back on the Diversity Track”), and even the broader media. A
number of studies have linked improved governance and/or financial performance to having three or
more women (or a critical mass) on boards (Wellesley Centers for Women, Catalyst, McKinsey).
Regional, national and international conferences as well as webinars have occurred in increasing
numbers, presenting speakers and panels of governance experts, board members, corporate
executives, institutional investors, women’s organizations, researchers, etc. Conference and panel
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sponsors have included The Conference Board, School of Advanced International Studies (SAIS),
and the Council of Institutional Investors.
Though the numbers moved in the early years, they have remained stagnant for at least the last five
years. However, having the data has permitted organizations to gain continuing media visibility for
the issue, has publicized those companies that are making progress and those that have few or no
women directors, and has served as a basis for honoring companies that are adding women to their
boards.
II.
Initiatives to influence the supply side of the issue by trying to increase the number of
qualified women and make them more accessible
In the US for quite some years there has been activity on the supply side of the issue as women’s
organizations, some business schools, and consulting and search firms have offered special training
programs for women interested in board service. Organizations like Catalyst, Women Corporate
Directors (WCD), Boardroom Bound and ION have offered help to companies and search firms in
accessing a pool of women qualified to be directors. Individual women directors have tapped their
networks to suggest additional women for boards on which they serve. Agenda magazine published a
list of “Top 100 Global Board Diversity Candidates You’ve Never Heard Of,” in 2010 and 2011.
Though these efforts have resulted in individual women being added to boards, the one-at-a-time
effort has not significantly changed the overall statistics.
Other countries have also seen efforts on the supply side. In Canada, Women on Board – a nonprofit
– launched a mentoring program connecting senior executive women with CEOs and Board Chairs
from participating, non-competing companies. Efforts to bring corporate leaders together with boardready women have been tried in Norway, the UK and in the U.S.
In September, 2011, GMI announced the launching of 3D – Diverse Director DataSource, a database
of diverse prospective candidates for director positions. Commissioned by California Public
Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System
(CalSTRS), the database is supposed to respond to “investor, corporate and market demands for a
broader, international pool of boardroom candidates.” GMI defines ‘diverse’ as “the range of
attributes, experiences, perspectives and skill sets that can contribute to sustainable value creation by
corporate boards of directors.” It goes on to list “core attributes that make up a diverse board”,
including “the perspective of historically under-represented groups on the board, including women
and minorities.” (GMI press release)
III.
Initiatives to influence the demand side by trying to change the practices of
corporations and their boards
Over the past few years, CWDI has been reporting on global initiatives to achieve board diversity.
Additionally the law firm Paul Hastings and Catalyst have discussed differences in how legislatures
and regulators are addressing gender parity on the boards of listed companies around the world. In its
March 2011 report, “How Change Happens,” ION also did a brief summary of approaches being tried
in other countries and in the US. The numbers show that significant change has occurred in a number
of countries around the world while US numbers have remained largely stagnant, and the reports
show that change abroad has been driven by initiatives on the demand side involving government
action, regulators, and stock exchanges.
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Demand-side initiatives outside the U.S.
Legislative and government strategies in other countries
Government mandated percentage requirements for participation of women on boards, with target
dates – quotas. These have been the most dramatic and effective (in producing change) initiatives.
Most notable has been Norway’s mandate that companies have boards with 40% women directors by
2008. (Norway started with a voluntary quota law and changed to mandatory when sufficient change
did not occur.)
Similar legislation has been passed affecting public companies in Spain, Iceland, France, Italy and the
Netherlands. Additional countries – Denmark, Ireland, South Africa, Israel – have passed legislation
affecting state-owned companies. (There are variations among the countries in how enforcement
takes place and whether there are real penalties for non-compliance.)
The Malaysian Prime Minister announced in June 2011 that the cabinet had approved a policy giving
corporations five years to increase the number of women in senior positions and on boards of
directors to a target of 30%. A similar ruling was introduced for the public sector in 2004.
Requirements to report progress. In response to a report by the Australian Human Rights
Commission, the Workplace Gender Equality Act was passed, including transitional arrangements to
allow reporting organizations to adapt. Starting in 2012, organizations with 100 or more employees
will be required to provide annual reports to a new Agency, including details of the gender
composition of their boards, and non-compliant organizations may be disqualified from receiving
government work or funding.
Corporate Governance Codes and Stock Exchanges abroad
Revisions to corporate governance codes have been issued by securities commissions, stock
exchanges or other organizations establishing guidelines for good governance and including board
diversity. Countries using this approach include Australia, Finland, Sweden, and Belgium.
The Australian Stock Exchange (ASX) Corporate Governance Principles and Recommendations
require ASX companies to state in their annual reports the number of women on the board, in senior
management, and in the whole organization, to adopt and disclose a diversity policy that includes
targets in relation to gender, and to disclose progress. They will also have to include consideration of
diversity criteria when reviewing the skills of the board and recruiting new members. These are
treated as “comply or explain” requirements.
The Davies Report in the UK In 2010 the Government of the United Kingdom asked Lord Mervyn
Davies (a former bank chairman) to review the situation of women on corporate boards and make
recommendations on what government and business can do to increase the percentage of women. His
commission, which included other business leaders, issued a report in 2011 that did not recommend
mandatory quotas but noted that, if the recommended business-led approach does not work, “more
prescriptive alternatives” may be required. The business-led approach hopes that investors, chairmen
and chief executives, and search firms will cooperate. Some of its recommendations are: chairmen of
FTSE 350 companies setting out goals for the number of women directors in 2013 and 2015 with a
goal of 25% by 2015; a requirement to disclose annually the proportion of women on their boards,
senior executive positions, and in their entire organizations; executive search firms drawing up a
voluntary code of conduct addressing gender diversity; companies reporting on diversity in their
corporate governance statements; and amending the UK Corporate Governance Code to require listed
companies to establish a boardroom diversity policy. A revised UK Corporate Governance Code
(2010) had included a principle supporting board searches and appointments made on merit with
regard for the benefits of diversity including gender.
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After publication of the Davies Report, The Financial Reporting Council sought views on whether the
UK Corporate Governance Code should be revised to require listed companies to establish policies on
boardroom diversity and, in October of this year, it confirmed it would amend the UK Corporate
Governance Code to require listed companies to report annually on boardroom diversity policy,
including gender, and on progress towards objectives, starting in October 2012.
The Davies Commission promised to continue to monitor progress and just (Oct. 12, 2011) issued a
report blaming “institutional inertia” for disappointing results of only 33 of the FTSE 100 and 17 of
the FTSE 250 setting targets for raising the number of female directors. And some of those set very
modest goals. The results were unveiled at an event with the Prime Minister, who is writing to
“laggards.” (Financial Times article)
Voluntary and organized action in the business community outside the U.S.
In England in 2010 Helena Morrissey, CEO, Newton Investment Management, and Labour peer
Mary Goudie formed the 30 percent Club to energize the business community into acting. The Club
and its member corporations work with company chairmen to appoint more women to their boards,
with search firms, and with women seeking board appointments, and try to influence the political
agenda and gain media coverage, as they track progress towards the 30 percent goal.
Responding to the Davies Report recommendation, executive search firms in the UK issued a
voluntary code of conduct on gender diversity in July 2011.
In Canada a nonprofit that educates and advocates on behalf of those who invest and submits
shareholder proposals to companies has made gender parity one of its major policy issues. A
Canadian Board Diversity Council, made up of organizations that are leaders in diversity and
corporate governance in the private, public and nonprofit sectors, and funded by the Canadian
government, was launched in 2009. It set some numerical goals, has surveyed Financial Post 500
companies and issued findings in a report card, and plans to provide a multi-pronged approach to
encouraging CEOs and boards and helping board-ready candidates.
Demand-side initiatives within the U.S.
Although the US has not seen the kind or extent of legislative, regulatory or organized business
community activity reported elsewhere, the last couple of years have seen the beginnings of attention
to the demand side of the issue. Significant shareholder activism and some regulatory attention has
accompanied much more public and pointed calls for action on the part of different groups.
Legislative
The closest the U.S. has come to legislation was when New Jersey Senator Robert Menendez in
March 2010 initiated a survey of F500 companies to collect aggregate information on minority and
women’s representation in the boardroom, executive management and procurement. His particular
concern was Hispanic participation in corporate leadership. He had considered introducing follow-up
legislation but that did not materialize.
Regulatory
The SEC in 2009, after requesting and receiving comments from numerous organizations and
individuals (including many of those to be present on Nov. 16), approved new rules as of Feb. 28,
2010, requiring management of publicly held companies to disclose in annual proxy and information
statements whether diversity is a factor in considering candidates for nomination to the board, how
diversity is considered, and how the company assesses the effectiveness of its diversity policy. The
SEC rule requires neither a commitment to diversity nor provides a definition of diversity (though
many comment letters urged it to add these provisions). Not surprisingly, studies of the initial
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company reports show that many companies make vague comments on diversity, reference diversity
of skills and experience, and provide no numbers. One of the commissioners – Luis Agular – has
been outspoken on the need for more useful disclosures related to women and minorities and has
referenced the NFL and its “Rooney rule,” requiring all NFL teams to interview at least one minority
candidate for a head coaching position. This would be a way of ensuring that companies give serious
consideration to qualified candidates who happen to be women. (In a Corporate Board Member
magazine article in 2009 – “Getting Back on the Diversity Track,” attorney and board member
Frederick Nance had suggested boards adopt “something like the National Football League’s
‘Rooney rule.’”)
Institutional Investors
An increasing number of institutional investors have become active on board diversity in the last few
years. These include public retirement funds, state treasurers charged with investing those funds,
investment funds and the Council of Institutional Investors, which held a webinar on the subject of
board diversity. We have already described the database initiative undertaken by CalPERS and
CalSTRS.
Institutional investors have employed a variety of approaches to encourage companies to adopt
governance policies that explicitly recognize the importance of gender diversity and to implement
those policies by adding women to their boards of directors. They have developed suggested
language to be added to corporate governance codes. They use constructive engagement with
companies of which they are shareholders, public advocacy, and, when necessary, they use their
proxies and shareholder resolutions to bring about change. State treasurers Denise Nappier of
Connecticut, Steve Grossman of Massachusetts, Rob McCord of Pennsylvania and Nancy Kopp of
Maryland have spoken publicly on the importance of diverse boards. Among investment and mutual
funds, Walden and Trillium often collaborate with PaxWorld, Calvert and others, including state
treasurers, in concerted efforts to advance their common agenda. Women directors have taken seats
in some American boardrooms as a direct result of their actions.
Efforts to engage other institutional investors – colleges and foundations
ION developed a statement encouraging colleges and universities to vote their proxies and get
involved in ways similar to some of the other institutional investors. ION began with what seemed
the natural target group – women’s colleges – but did not find any that were willing to become active,
though a few have proxy voting guidelines stating they will support shareholder resolutions on board
diversity.
ION has also considered approaching foundations, following the lead of Unlocking the Power of the
Proxy – an effort to encourage foundations to vote their proxies on issues they support. Growing out
of work with Pennsylvania Treasurer McCord, The Women’s Funding Network held a webinar in
2011 to educate its member women’s funds on how they can get involved in this issue through
exercising their proxies and encouraging their state treasurers to get involved.
Individual shareholder efforts
As increasing attention is being paid to proxy access, retail investors, too, are finding ways to make
their voices heard. Several internet sites have been created to provide information to shareholders
about resolutions filed with public companies. Some of them enable individual shareholders to join
with others in support of such resolutions. The SEC has developed educational tools for retail
investors, and relevant information also is available from the Social Investment Forum
(www.socialinvest.org). Several years ago, ION developed a shareholder “toolkit” with suggested
actions and sample communications that individuals can use to make their positions known to the
CEOs, board chairs and nominating committees of companies in which they own shares
(www.IONWomen.org).
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2020 Women on Boards in 2011 launched a grassroots campaign to raise awareness of the issue
among people who may never have thought about it: young people, middle managers in companies
that do not have diverse boards, and consumers. The organization is trying to help them become
change agents through the use of social and traditional media.
Calls to Action
Building on prior calls to action published by its various member organizations, ION, in its March
2011 annual report, asked both institutional and retail investors to take action and suggested five
different steps they could take, including exercising their shareholder rights to vote and express their
views, considering board composition when making investments, encouraging their state treasurers to
become active, and encouraging colleagues, friends and alma maters to join in taking action.
At an event in May, 2011, WCD issued a challenge to leaders to “actively help bring more women
onto corporate boards and to build diverse boards that are multi-gender, multi-national, multi-ethnic,
and multi-generational.” In addition to asking corporate leaders to do such things as build the pipeline
through advocacy and mentorship and expand the pool by looking beyond CEOs, the Call to Action
listed recommendations for: “regulatory agencies, stock exchanges, and governance communities
around the world. . . to encourage nominating committees to secure diverse directors and to explain
their Board selection process in their proxies;” CEOs to “champion and promote the business case for
women on boards and in senior positions;” “Board Nominating Committees, Executive Search firms,
Succession Planners and Boards themselves . . . to commit to including at least one woman on every
slate.”
WHERE WE STAND AND WHERE WE NEED TO GO
A September, 2011, conference in Washington, D.C., sponsored by SAIS (The School of Advanced
International Studies of Johns Hopkins) and chaired by Susan Ness, featured panels, presentations
and reports on the current status of women on boards in the US and around the world and efforts to
make change. Irene Natividad, Chair of Corporate Women Directors International, reported on the
striking increase in women on boards in countries that have instituted quotas and contrasted that with
the near stagnant pace of change in the US (www.globewomen.org/cwdi/cwdi.htm ). Even in those
countries that have not enacted quotas – notably the UK and Australia – initiatives have been
undertaken that are more robust than those currently in place in the US, and greater progress has
occurred.
The conference served to move the conversation to what seemed like a recurring theme that strategic
action, particularly on the demand side, is necessary to create significant change in the US if we are
to catch up to the pace of change in numerous other countries.
Some key points that emerged from the SAIS conference and that we would like to consider
going forward as we work to achieve the objective of increasing the number of women in the
public company boardroom:



The problem is not lack of research, though continued research is always important.
The issue is not at this point the business case or trying to convince people of the
business case.
The problem is not on the supply side. While it is important to continue to prepare
women (and men) for board service and to promote women into the leadership positions
that qualify them for such service, there currently is a considerable untapped pool of
women candidates. The challenge is getting boards to look beyond their usual pool of
candidates for board positions.
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