Fund groups are lagging behind banks and other industry peers in achieving gender parity on their boards, research by EY has found. The worst gender diversity was seen across boards of asset managers and wealth managers, according to the Big Four firm’s latest Boardroom Monitor, which tracks companies in the MSCI Europe Financials Index.
Forty per cent of board seats at fund houses belong to women while 60pc are occupied by men. Europe’s largest financial services firms are responding to greater pushback from shareholders and anticipated regulatory changes by boosting female director numbers, EY noted in the report. Half the board appointments made last year were female, up eight percentage points on 2021.
“Across Europe, boards and company management are taking clear steps to increase diversity across a range of measures,” said Omar Ali, EY Emeia financial services managing partner.
“Progressive businesses are anticipating regulation, and view diversity as a strategic priority, understanding that more diverse views, backgrounds and experience play a role in identifying and responding to risks, and ultimately create more effective boards.” Banks and insurance providers boasted the most gender-diverse boards, EY’s monitor said, with women representing 43 per cent of seats at the table. Wim Mijs, European Banking Federation CEO, said banks stand to gain” tangible benefits from greater diversity in their workforce, management and financing activities.”
Europe’s biggest financial firms have also recruited more sustainability experts to the boardroom. The number of companies with directors that have professional experience or expertise in sustainability jumped from 19 per cent in EY’s inaugural June 2022 Boardroom Monitor to 32 per cent now.
Once again, investment banks continued to lead the charge, EY found 43 per cent of bank boards included directors with ESG backgrounds, compared to 32 per cent of asset manager boards. However, the Big Four firm noted this was an improvement from June when only 11 per cent of fund groups had such expertise on their boards. Insurers were the biggest laggards, with only 17 per cent of boards including directors with ESG expertise.
Sustainability hires have been ramping up recently, EY said. Of the current directors with sustainability experience, two-thirds were appointed in the past three years. Ali said: “Since June, we have seen a big increase in the number of directors with sustainability experience appointed to financial services boards, albeit from a low base.” He added: “Climate change presents both a systemic risk and significant opportunity for financial services and we expect boards to continue to build expertise at this accelerated pace.”
A study of forty thousand workers conducted on pay gap found that gender pay gap can be wiped out when 60 per cent of a company’s managers are women and they operate a performance-related pay system. The social scientists who conducted the research suggested it could be due to women managers being better judges of other female staff’s performance, a reduction in pay bias and women “shop-floor” staff feeling more motivated by a “fairer” regime.
The academics based their conclusions on 3,200 workplaces, data on their jobs and personal characteristics and more than 400 observed workplaces. They found that the wage gap disappeared when there were 90 per cent female managers in a firm, of which there are about 10 per cent in the UK.
However, once performance-related pay was introduced the proportion of female managers needed fell to 60 per cent. Prof Alex Bryson, who led the research, said the study suggested that increasing the proportion of female managers could have more of an impact on pay differentials than women appointments to the boardroom.
He said: “We offered a number of hypotheses. One is women are better at recognising the productivity of other women. Second, women might be more likely to challenge discriminatory practices.” (The writer is our foreign correspondent based in the UK)
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