A new study from Bloomberg Intelligence (BI) shows that companies with more women on boards in the US, Europe and Asia-Pacific (excluding Japan)1 draw higher annual returns, between 2-5%, compared to peers with less gender diverse boardrooms since 2018. According to the BI Women Capital study, the return differential between the highest and the lowest quintile of women on the board was 11% in the US, 13% in Europe and a sizable 35% in Asia-Pacific.
Adeline Diab, BI Director of Research and Chief ESG Strategist, commented: “Women capital drives value, gender diversity reinforces fundamental analysis and could help investors make more informed decisions, while also demonstrating better ESG credentials. More diverse boards often result in higher profits, stronger valuations and lower volatility in developed markets, like in the US and Europe. Meanwhile, in emerging markets, gender diverse companies demonstrate lower volatility, but have not translated into stronger returns as women in boardrooms do not appear to be a priority or fully recognized by markets.”
BI’s analysis reveals that women’s presence in boardrooms has tripled to 26% in 2023 from under 9% in 2010. The strong progress, especially in developed markets which continues to maintain momentum, has been aided by regulatory support and shareholder activism – except in Japan where women remain mainly absent from Nippon boards.
Gender quotas have pushed diversity despite controversy in many developed markets, such as France leading global peers with 45% female board ratio. Yet, some countries have made progress without mandatory targets or quotas, like the UK achieving 42% women board representation. Investor activism also serves as a catalyst, driving progress in Australia and the US, despite the latest diversity, equity and inclusion (DEI) backlash in the US.
However, regional differences persist. BI’s analysis found that boardrooms in emerging markets trails global standards for gender diversity, highlighting the lack of market and regulatory support, especially in Latin America, where over 10% of companies have no female directors.
Sector gaps also leave room for more improvement globally. BI found that the financials and health care sectors lead the way at almost 30% female board representation, while technology and capital-intensive sectors, such as industrials, materials and energy, lag at around 20% representation.
Women in executive leadership positions have also yet to move the needle, as women make up only 6% of CEOs globally and just 3% in emerging markets, with the highest number of female CEOs in the US and Europe at 8%. The CFO position has made the strongest improvement of the C-Suite reaching 14% globally, including strong representation in Singapore and Australia at 30% and 20% in the US and Europe.
Adeline Diab added: “Some countries in developed APAC have made a remarkable progress on the number of women in executive roles, mostly in the CFO role. We can’t help to wonder if the rise of female prime ministers in the region, including Australia’s Julia Gillard, New Zealand’s Jacinda Ardern or Hong Kong’s Chief Executive Carrie Lam, helped drive a breakthrough.”
“In addition, according to our BI forecasts, although gender parity may be reached across developed Western markets before the next decade, Australia and New Zealand could hit gender parity by 2028, faster than the Western markets by at least two years, setting global standards.”
Looking ahead, according to BI, regulations and quotas will continue to serve as key catalysts driving gender diversity on boards – such as the EU’s mandated quota to ensure at least 40% of non-executive directors or 33% among all directors are women by 2026. In Hong Kong, listed firms will also have to add at least one woman to the board by the end of this year to comply with the exchange’s new gender rules. Additionally, the US presidential election and the prospect of the first female US president could serve as a strong catalyst.
