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March 22, 2010
Women Are Still Underrepresented on Corporate Boards
    by Robert Kropp

White paper from The Corporate Library finds that board-level gender diversity is lacking, especially among smaller companies, and suggests that new SEC rules on disclosure may help improve diversity.

International Women's Day was celebrated on March 8, and on that date the United Nations Development Fund for Women (UNIFEM) and the UN Global Compact (UNGC) published the Women’s Empowerment Principles, a series of seven steps for companies to take to ensure the empowerment of women in the workplace.

The second of the Women’s Empowerment Principles urges companies to "proactively recruit and appoint women to managerial and executive positions and to the corporate board of directors." It further recommends that at least 30% of those responsible for corporate governance decision-making in all business areas are women.

The degree to which major companies have thus far fallen short of such goals was described in a recent white paper authored by Annalisa Barrett, a Senior Research Associate at
The Corporate Library. In its study of gender diversity among corporate directors in companies listed on the S&P 500, the Russell 2000, and the Russell 3000 stock indexes, the paper, entitled Uneven Progress: Female Directors in the Russell 3000, finds that women continue to be underrepresented on corporate boards.

Although nearly 90% of S&P 500 companies have at least one woman on their boards of directors, the extent of women's representation seldom extends beyond that single seat; only 19% of S&P 500 companies have more than two women on their boards. Furthermore, the boards at only 14 S&P 500 companies are chaired by womenwomen chair the boards at only 14 S&P 500 companies; eleven of these women chairs are also CEOs of their companies.

When the paper turns its attention from the largest companies to those in the broader Russell indexes, the lack of diversity becomes even more striking. Forty percent of companies in the Russell 3000 index, and half of the companies in the Russell 2000 index, have no women on their boards. The relative lack of diversity at the smaller companies in the Russell indexes suggests that "these companies do not receive as much
scrutiny from those promoting gender diversity in the boardroom as the largest firms," according to the report.

Noting that in February, the Security and Exchange Commission (SEC) implemented a rule requiring disclosure of how companies consider gender diversity in choosing nominees for boards of directors, the report suggests that smaller companies may reconsider their current positions on board diversity as a result.

If companies are looking for a template for improving gender diversity at the board level, they could consider a practitioner's guide issued last year by the
Global Reporting Initiative (GRI) and the International Finance Corporation (IFC), entitled Embedding Gender in Sustainability Reporting. Produced to help companies use the GRI Sustainability Reporting Framework to include gender issues in their reports, the GRI guide cites "research suggesting that organizations with gender diversity on corporate boards and in senior-level management tend to perform better financially," and recommends that companies include "gender-disaggregated data on the composition of boards and management in sustainability reports."


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