Board Diversity Governance ASX200

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What Happens

When a Diversity

& Inclusion Policy

Applies to the Directors of

a Company?

With 67 companies out of the ASX200 with diversity and inclusion policies applying to

their boards surely we are seeing progress

for the inclusion of talented people from under-represented groups on these boards at least?

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127

companies

with fully inclusive definitions of diversity do not report board targets for diversity beyond gender and generally only report on gender,

age and sometimes age or geographic location.

This is regardless of whether diversity

policies apply to the board and directors.

Australian

company

(out of the ASX200) reports

more broadly on diversity at

the board level across LGBTQ+,

First Nations, Cultural background

– Woodside Energy.

A further company in the ASX200 has clear

targets that go beyond gender at the board

level and reports against them (Block Inc.), given Block’s NASDAQ listing in the US and Block’s need to comply with the California Board Diversity Board Bill – the number of under-represented community members on the board is disclosed.

So with only 2 companies in the ASX200 reporting on diversity beyond gender and only 1 with defined targets beyond gender we can say that not much is happening. Directors and boards that have agreed to be subject to broadly diverse policies should be considering how they can adequately comply with their own polices.

Why bother with fully inclusive policies at the board level if you don’t implement them fully?

Not everything that matters

can be measured. Not everything that we can measure matters.

V. F. Ridgeway, 1956

Gender

parity targets

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Many policies and charters amongst the ASX200 companies state that the board will establish measurable objectives or targets for diversity.

While gender parity is incredibly important gender targets can be a very blunt instrument and do not allow for intersectionality.

71 companies in the ASX200 have adopted what is colloquially known as 40:40:20 which was promoted by Chief Executive Women and the Male Champions of Change in 2019.

This refers to 40% female, 40% male and 20%

of either gender on boards – therefore only one aspect of diversity is considered.

ASX300 female board seats in 2010 vs. 2023

8.3

ASX300 female board seats in 2010

Compared to

ASX300 female board seats in 2023

According to Watermark Search

and the Governance Institute

of Australia.

This is fantastic progress but cultural, First Nations, LGBTQ, disabled representation has remained stubbornly low and far below their proportions in the population. Who have benefited from this increase?

The rationale for the introduction of 40:40:20 was referred to as the “merit trap”

Namely, “When we use merit as

shorthand for a package of admirable qualities that we innately recognise,

we devalue ‘merit’. Many studies confirm

that we are drawn to those who think,

look and act like us. This is a problem

for women working in male dominated environments where there are deeply

held beliefs and norms about who is

suitable for leadership.”

Source: In the Eye of the Beholder – Avoiding the Merit Trap.

It is interesting to note that as gender representation increased on FTSE300 Boards

in the UK the representation of people from

lower socio-economic backgrounds reduced.

Have we now created a new cohort of “people like us” on boards in Australia which spans gender

and has become the new merit trap? On average female directors in Australia have on average more boards than male directors in Australia which also implies and “acceptable” cohort of people with a small group of females perhaps being deemed suitable further embedding the “merit trap”.

Given this, should 40:40:20 become more intersectional with the 20% representing under-represented groups beyond gender?

This is very similar to the way in which NASDAQ defines

its listing rules for board composition in the US.

One Australian company proves it can be done

The only Australian company in

the ASX200 that provides detailed reports on its board's diversity is Woodside Energy. None of the other Australian companies share these statistics at the board level.

female representation

LGBTIQ+ representation

As of 31 December 2022, Board diversity included: - 36% female representation - 9% LGBTIQ+ representation - country based cultural diversity included - Indigenous and non-Indigenous Australian, American, Singaporean Chinese and English - racial diversity included 9% Asian, 9% Indigenous Australian, 82% white/Caucasian.