“MEANWHILE IN ESG”: Gender diversity, a far-fetched idea?

The World Economic Forum seems to think otherwise! As they point out in their article on the link between female board representation and corporate profitability, a McKinsey report (2020) demonstrates that “companies in the top quartile for gender diversity on their boards were 25% more likely to deliver above-average profitability than companies in the bottom quartile.”.

To further illustrate their points, it is explained in this same report how much UK is losing every year due to the lack of gender diversity at the executive and strategic levels, namely up to three times the police budget (￡18.69 billion for 2019-2020, cf. Statista).

Board #diversity is important for several reasons, and it is tracked and captured by us. With the help of GGX, #asset managers can get unbiased insights about the true diversity into its #portfolios.

1. Inclusive Decision-Making: Diverse boards bring together individuals with different perspectives, backgrounds, and experiences. This diversity fosters a more inclusive decision-making process as various viewpoints are considered, leading to more well-rounded and effective solutions.

2. Reflecting Stakeholder Diversity: Boards should ideally reflect the diversity of the stakeholders they serve, including employees, customers, and the broader community.

3. Enhanced Innovation: Different perspectives and experiences contribute to a culture of innovation. Board members from diverse backgrounds may bring unique insights and ideas that can drive creativity and innovation, helping the organization adapt to a rapidly changing business environment.

4. Improved Financial Performance: Boards with diverse members, mostly drive the overall returns (see table below) significantly.

5. Better Problem-Solving: Diverse boards are often better equipped to tackle complex problems. When faced with challenges, a group with varied skills and experiences can approach problem-solving from multiple angles, leading to more comprehensive and effective solutions.

6. Talent Attraction and Retention: Organizations that prioritize diversity at the highest levels are more likely to attract and retain a diverse pool of talented individuals.

7. Customer and Market Understanding: A diverse board is better positioned to understand and connect with a diverse customer base. This understanding can be crucial for developing products, services, and marketing strategies that resonate with different demographic groups.

In summary, board diversity is not just a matter of social equity; it is a strategic imperative that positively impacts organizational performance, innovation, and long-term sustainability. In our GGX ratings, we are evaluating the gender diversity on the board of directors of companies. Find below the 15 best companies of our universe in that matter for Europe, the US, globally as well, and learn more about our solutions at www.ggx.swiss