Hong Kong’s largest listed companies fail to achieve gender parity

None of Hong Kong’s top-rated companies have achieved gender parity on the board, with the Asian financial center trailing so far behind its global peers that so many white men sit on the boards of its most large groups listed as women from all walks of life.

A Financial Times analysis on direction data Tracked by activist investor David Webb shows that at the end of 2020, only 74 women were on the board of directors of the 52 companies in the Hang Seng Index. White males, who make up about 0.5% of Hong Kong’s population, also made up 74 of the total. More than a quarter of companies had all-male boards of directors.

Global funds are increasingly prioritizing board diversity in investment decisions, and some have started to vote against appointing all-male boards in the city. But as the Hang Seng prepares to welcome more mainland Chinese companies into its ranks, the balance may shift even more in favor of men.

“Hong Kong is missing out and it’s embarrassing – quotas are the only way to fix it,” said Teresa Ko, president of China at Freshfields and the company’s first female equity partner in Asia.

Ko opposed quotas when she was the first woman to head the stock exchange’s rating committee from 2009 to 2012. But the slow progress has changed her mind. “There are a lot of qualified women, there is just no impetus for change,” she said.

Exchanges and governments are increasingly looking for ways to remedy the delay in representation. In November, the German cabinet agreed to introduce a quota for women on boards of large listed companies, while in December, the tech-focused Nasdaq sought approval rules who recommend that companies have at least one woman and one “minority” director.

Hong Kong Exchanges and Clearing – which has a monopoly on stock trading and clearing in the city – has no obligation for companies to have women on the board. Instead, applicants whose boards are exclusively male must promise improvement within three years of listing, which the exchange says it will “watch.”

HKEX said it was “committed to driving change [on gender parity], promoting and upholding diversity and leadership on boards of directors and ensuring that Hong Kong benefits from the diversity agenda in the region ”.

Critics say this approach has yielded glacial gains. The share of women in Hang Seng Index board seats has increased from 9.6% to 13.9% over the past decade, including women who sit on multiple boards.

During roughly the same period, the share of women in the board seats of FTSE 100 companies increased from 12.5% ​​to 36.2%. Among the S&P 500 companies, the representation of women on boards has increased from 16% to 28%. Every stock of FTSE 100 and S&P 500 components now has at least one woman on the board.

The gender gap reflected in the city’s major stocks could widen as the Hang Seng indices pushes reforms forward that will eventually double the number of companies in its eponymous benchmark stock index, followed by about $ 28 billion in exchange-traded funds and pension funds.

The move, meant to better reflect the growing bloc of popular mainland companies that have dominated the lists in recent years, is expected to largely favor Chinese tech groups whose boards are often dominated by men.

In Hong Kong, institutional investors have started voting against appointing men to replace outgoing directors on all-male boards. State Street, the Boston-based asset manager, told the FT it had voted against eight of the nominations.

“There is an appetite for more intervention due to the slow pace of change,” said Janet Ledger, COO of Community Business and leader of the group’s initiative to attract more women to boards. directors of listed companies.

Line charts showing that companies in the Hang Seng Index are lagging behind their international peers (FTSE 100 in the UK and S&P 500 in the US) in terms of female representation on the board of directors

Ledger said women often had to already occupy comparable seats to be offered another opportunity, while the low turnover of board members further reduced opportunities for advancement.

“Unless you make a concerted effort to come out and look at a large pool, you keep the club that can be invited to participate smaller,” she said.

The situation outside of Hang Seng is much the same. Of more than 2,500 main registrations in Hong Kong, women hold only 14.6% of board seats.

Lollipop chart showing no conference hall in the Hang Seng Index has achieved gender parity

Corporate governance experts say this is in part because many listed companies are owned and run by a family patriarch who is more likely to choose a man to fill a board primarily intended to serve as a group of yes-men.

When a head of household raises a woman on the board, he or she often chooses a parent, underscoring the need for board diversity and independence that goes beyond a single female board member.

“We believe the first female director is an important first step,” said Benjamin Colton, global co-director of asset management at State Street. But he added that a significant improvement in governance required more serious changes.

“You shouldn’t have to be the CEO’s wife or daughter,” Colton said. “It’s about expanding the network. . . it’s about accessing talent and refining the appointment process. “

Fiona Nott, executive director of the Women’s Foundation in Hong Kong, said the city’s lack of parity poorly reflected its core standards of governance.

“Hong Kong should be hampered by the low number of women on boards,” she said. “We are a global financial center and in order for us to maintain our position, [to] have well-governed, high-performing businesses – diversity is essential. “

Additional reporting by Jane Pong

* This article has been modified to clarify that the Nasdaq rules on diversity do not include a quota

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