July 2010
 
THIS ISSUE’S HIGHLIGHTS:
I.  WHY EUROPE WILL SURPASS THE U.S. IN CHANGING BOARD COMPOSITION
II. WHERE WOMEN ARE ON THE BOARDS OF THE 200 LARGEST COMPANIES IN THE WORLD
III. CWDI/IFC PARTNERSHIP ON PROMOTING BOARD DIVERSITY
IV. ‘PROGRESS’ ON JAPAN’S CORPORATE BOARDS?
V.  WHAT STOCK EXCHANGES AND CORPORATE GOVERNANCE COMMISSIONS ARE DOING TO TRACK BOARD DIVERSITY

 

 

 


RECENT CWDI REPORTS

• CWDI/IFC Report on Accelerating Board Diversity (2010)
• 2010 CWDI Report: Women Directors in the Fortune Global 200
• 2009 CWDI Report: Women Directors in Japan’s 100 Largest Companies
(Click here to order)



COUNTRIES WITH QUOTAS


NORWAY
      


SPAIN


FRANCE
 (awaiting Fall 2010 vote)


NETHERLANDS
(awaiting Fall 2010 vote)


DENMARK


FINLAND


ICELAND


IRELAND


SWITZERLAND

 


Norway’s Minister for Children, Equality, and Social Inclusion Audun Lysbakken and CWDI Chair Irene Natividad at CWDI/IFC Roundtable 


 Roundtable participants


SONY Corporation’s Two Women Board Directors


Sakie Fukushima


 Yukako Uchinaga


CWDI opens Johannesburg Stock Exchange
2009

CWDI opens Toronto Stock Exchange

2008

CWDI closes the NASDAQ Market

2006

 
 I. WHY EUROPE WILL SURPASS THE U.S. IN CHANGING BOARD COMPOSITION
      There is a quota tsunami sweeping Europe, and its impact will forever change the faces of board directors in its top companies.  In a study released last month on “Accelerating Board Diversity” in Beijing at the 2010 Global Summit of Women, CWDI reported on current initiatives globally to increase women’s presence on corporate boards including quota legislation.
      It all began with Norway, which successfully implemented a quota law in 2004 mandating 40% of board seats to be allocated for women in all its companies within a two year period.  Spain followed suit with a similar law in 2007, but with a longer 8-year deadline.  The lower houses of the Dutch Parliament (2009) and the French Assembly (2010) also passed quota laws, while Finland, Iceland, Ireland, Switzerland and Denmark already have quotas in place for women directors in government-owned companies  There are now efforts to expand quotas to publicly-listed corporations in Finland, while Iceland had already done so this year.  Even German cities such as Berlin and Nuremberg have quotas in place for state-owned companies in those cities. Deutsche Telekom and Daimler – two of the largest German companies – have quotas in place for women in senior management at 25% and 20% respectively.
      Why is this trend happening?  Because it works.  While the U.S. percentage of women directors currently stands at 15.2%, Norway’s 44% women’s representation on boards exceeded its own target of 40%.  So, if the goal is simply to increase the number of women on corporate boards more rapidly, then European countries have found quotas to be effective.  There is also a tradition already in place for using quotas to improve women’s presence in the Parliaments of Europe, so using this legislative strategy in the private sector is just another aspect of arriving at equity.  Lastly, Europe has a larger number of companies that are government-owned, so governments as shareholders have a larger ‘voice’ in board composition.  (To order the CWDI report on Accelerating Board Diversity, log on to www.globewomen.org, click to CWDI.  See International Herald Tribune on this report – www.globewomen.org/summit/2010/Press/IHT.Article.5.27.htm

II. WHERE WOMEN ARE ON THE BOARDS OF THE 200 LARGEST COMPANIES IN THE WORLD
      Over 3/4ths (77.5%) of the 200 largest companies globally now have at least one female director on their board.  That’s one of the good news in the 2010 CWDI Report on Women Directors in the Fortune Global 200.  The other good news –there are more large companies with two women directors (58) than those with just one (51).

                 TOP FIVE COMPANIES WITH HIGHEST PERCENTAGE OF WOMEN DIRECTORS
    

          This is the third report by CWDI on the Fortune Global 200, and the bad news -- progress remains glacial.  The percentage of women directors in the 200 largest companies is at 12.2% in 2009, a mere 1% increase over 11.2% in 2007.   This means that men still hold 87.8% of board seats in the world’s 200 largest companies. The majority of companies with no female representation are from Asia. (64.4%), although China has one company in the Top Ten list with the highest percentage of women directors – China Construction Bank with 29.4% of its board female. The leaders of this list are Norway’s Statoil Company and U.S.-based Kraft Corporation with 40% of their board seats held by women.  (For copies of the report, log on to www.globewomen.org, click to CWDI.  See CNN Money article on this report – www.globewomen.org/CWDI/2010%20Global/CNNMoneyArticle.html.)

III.  CWDI/IFC PARTNERSHIP ON PROMOTING BOARD DIVERSITY
      The International Finance Corporation, the private sector arm of the World Bank, has partnered with CWDI to bring together all research efforts on women directors globally, as well as all initiatives to increase women’s presence on corporate boards. The result is the report on Accelerating Board Diversity mentioned above.  In addition, CWDI and IFC convened the first-ever Roundtable on Board Diversity  on March 26th in Washington, D.C., which brought together key stakeholders involved in this issue – government officials, board directors, researchers, institutional shareholders and corporate governance experts.                       .
      Norway’s Minister for Children, Equality, and Social Inclusion Audun Lysbakken presented on his country’s successful implementation of the quota law mentioned above. Australia’s Federal Sex Descrimination Commissioner Liz Broderick spoke of the Australian Stock Exchange’s new  requirement that member companies must report on board diversity and to explain “why not” if diversity is absent.  SEC’s Rick Ferlauto explained the Commission’s equally new ruling that board diversity must be reported on in U.S. companies’ annual filings with the Commission.  These were but a few of initiatives shared for the first time in one forum.  A future Roundtable is planned to accelerate each country’s efforts through these exchanges.

IV. ‘PROGRESS’ ON JAPAN’S CORPORATE BOARDS?
      On November 11, 2009, CWDI released its 2009 Report on Women Directors in Japan’s 100 Largest Companies.  This was the second study of Japanese women directors conducted by CWDI.  The first was 11 years earlier, the release for which was followed by the first-ever Colloquium for Japanese female directors held in Tokyo.  In 1998, only .2% of board seats were held by Japanese women.
     It will not surprise anyone that there has been little ‘progress’. Currently, there are only 15 women directors serving on the boards (or 1.4%) of Japan’s largest companies, many of which carry brands that are household names all over the world. Because the majority of board seats in these companies are held by ‘inside’ directors or senior executives, where women are so few or nonexistent, the ‘pipeline’ for women directors is very slim.  All the women directors are ‘outside’ or independent directors in these large companies.  Only Sony Corporation has two women serving on its board.  (For a copy of CWDI’s 2009 Japan report, log on to www.globewomen.org,  click to CWDI.)

V. WHAT STOCK EXCHANGES AND CORPORATE GOVERNANCE COMMISSIONS ARE DOING TO TRACK BOARD DIVERSITY
      As a way of being proactive and getting in front of legislative mandates on board diversity, some countries' stock exchanges and corporate governance commissions are including 'board diversity' as a condition of being a listed company and as a necessary component of good corporate governance.
     Germany is the latest country to include in the German Corporate Governance code a provision requiring each company to design diversity goals for Management and Board and to present them for discussion at shareholder meetings.  There is a principle of “comply and explain.”  Spain, Finland, Sweden and Belgium have similar provisions in their country’s corporate governance codes – guidelines often followed by companies for transparent and responsible governance. 
     Meanwhile, Spain and Australia have stock exchanges which require information on board diversity in listed companies’ annual filings.  The Australian Stock Exchange is going a step further in asking each company for numbers of women on their boards, senior management and overall employees in their annual filings.  It also asks for diversity targets for all three and progress in reaching them.
     Meanwhile, the U.S. Securities and Exchange Commission has also added a new diversity disclosure requirement.  Companies must now disclose whether and if so, how, their nominating committees consider diversity in identifying nominees for director.  “All of these provisions are steps in the right direction,” states CWDI Chair Irene Natividad, “but they require commitment to promote compliance.”



*****************
Since 1997, Corporate Women Directors International has conducted research to provide baseline data on women board directors in different countries, regions, and industries.  CWDI also convenes women directors in different parts of the world on issues of corporate governance.  For more information, go to www.globewomen.org.