Gender targets critical to stop backwards slide on equality in leadership

The continued failure to get more women into C-suite roles shows why it’s high time our biggest listed companies demonstrate leadership and set targets to improve gender equality in corporate Australia.

The latest Chief Executive Women (CEW) Senior Executive Census?paints a bleak picture. There’s a dearth of women in line roles. And women fill just a quarter of ASX200 executive roles. It’s then no surprise that just 18 women have climbed the ranks to CEO in the ASX300 - one less than the previous year.

Based on CEW census trends over the past five years, it will take 65 years (or until 2086) before women make up 40% of line roles in executive leadership teams.

The research reveals a story many women are familiar with when it comes to the faces looking back at them in the leadership teams of corporate Australia. A quick glance at who’s heading up HR, Corporate Affairs, Marketing, Sales, Legal, Risk, Strategy or Technology will reveal they’re most likely women.

If you’re in an executive leadership team meeting in 60% of ASX300 companies, you’ll find there’s no women in line roles. You’ve got little chance to lead the company if you haven’t had previous profit and loss accountability. The research confirms 78% of CEOs are appointed from line roles. Just 14% of women fill these roles across the ASX300. It’s little wonder we’re seeing such a glacial pace of change when it comes to who is leading our biggest listed companies.

But this isn’t just an argument about who gets to call the shots in corporate Australia. The lack of progress on diversity represents a huge, missed opportunity, creating a long-term drag on the performance of our companies and our economy.

That’s why we want to see progress. Systemic gender inequality impacts our members’ investments, their career opportunities and the strength of the economy and society in which they live and work.

Australia reported our worst ever result in the World Economic Forum’s annual Global Gender Gap Index, coming in at 50th out of 156 countries in 2021. In 2006, we were 15th in the world.

Behind these numbers are the human consequences; the potential not reached, the grinding pressure of financial insecurity and the vulnerability to poverty women face, particularly as they age.

It’s going to take courageous leadership to turn this around.

Long-term investors like HESTA have a clear role to play. Already we’ve seen progress. In 2017, HESTA was the first major super fund to commit publicly to voting against directors up for re-election on all male boards. In August, for the first time there were no all-male boards left among the ASX200.

It’s why we, along with CEW and others, founded 40:40 Vision – an investor-led initiative aiming to achieve gender balance in executive teams of ASX200 companies by 2030.

We’re determined to see the leaders of our biggest companies better manage the clear financial risk of gender inequality, especially as there’s growing evidence it will improve the long-term performance of their businesses.

At its heart, 40:40 Vision is simply asking our corporate leaders to apply the same business discipline to improving gender equality as they would to managing any other financial risk: set clear metrics and timeframes, and report regularly and transparently on progress.

A growing number of investors share our view that taking this approach to managing gender equality is an accurate indicator of a well-run company. Investors representing more than $6.3 trillion in assets under management or advice have so far backed 40:40 Vision and its push to have companies set public gender targets. Increasingly, Boards and management are recognising the performance edge diversity can provide. Despite launching late last year, 10 ASX200 companies – with a market capitalisation worth collectively close to $300bn (or 13% of the index) – have already signed up to 40:40 Vision.

Setting targets works because it creates accountability. But Australia’s women do not have the rest of century to wait for change at our major companies. Like CEW, we share the view that if we don’t see progress, additional measures like legislating quotas for leadership may be necessary.

It would be a damning indictment of our current corporate leaders if we got to this stage, particularly given the clear performance benefits strong, inclusive and diverse company cultures deliver.