Across the world, female talent remains among the least utilised economic and business resource. Closing the gender gap therefore, would yield exponential results with the potential to substantially improve corporate bottom lines and accelerate economic growth.
As for the ground situation, Sri Lanka was ranked No. 100 in the World Economic Forum’s (WEF) Global Gender Gap Index 2018, lagging behind Bangladesh (48) but ahead of India (108) and the Maldives (113).
On matters of economic participation and opportunity, educational attainment, health and survival, and political empower ment (all sub-indices), Sri Lanka was ranked 125th, 90th, first and 65th respectively.
Meanwhile, Sri Lanka is in 107th place among 167 countries in the Women, Peace and Security Index 2019/20. Studies such as the Catalyst analysis of the Fortune 500 for instance, have concluded that firms with gender diverse boards tend to outperform those with male-only boards – by as much as 53 percent (as measured by returns on equity) in fact.
This illustrates the fact that shattering corporate glass ceilings is a smart business strategy.
And there’s more…
Women CEOs in Fortune 1000 companies are believed to be driving three times the returns of S&P 500 enterprises, which are predominantly run by men.
Globally, corporations that enjoyed the benefits of strong female leadership have generated an annual return on equity of 10.1 percent (on an equal weighted basis) compared to 7.4 percent for those without women at the helm.
Furthermore, businesses with greater gender diversity tend to suffer less governance related controversies than the average corporate.
A case in point is a 19 year study of 215 Fortune 500 companies, which reveals that those with the best record for promoting women outperformed industry revenue averages by a whopping 46 percent.
The failure of listed companies to capitalise on this valuable resource comes with a huge opportunity cost. There’s a dearth of women on corporate boards and within senior ranks of leadership here in Sri Lanka – and likewise, on a global scale too.
In Sri Lanka, while there’s a relatively high degree of female participation in public service and academia, whether women are adequately represented on corporate boards is a burning question.
The country registered a female labour force participation rate of 34.6 percent in the second quarter of 2019 compared to 33.6 percent in the preceding year and 36.6 in 2017, which is a cause for concern. What’s more, the female unemployment rate stood at 7.5 percent in the second quarter of 2019 whereas the corresponding figures for 2018 and 2017 were 7.1 percent and 6.5 percent respectively.
These and other pertinent factors were in fact, the focus of LMD’s March 2019 edition, which set out to assess and weigh the ‘board balance’ in Sri Lanka’s listed entities.
A subsequent analysis that has been customised for the LMD 100 in financial year 2018/19 considers the number and share of directorships held by females.
Moreover, it provides a breakdown of female representation on company boards in the context of 20 business sectors ranging from banking, finance and insurance, to telecommunications, trading and more.
An in-depth study of the data indicates that 44 percent of leading listed company boards in Sri Lanka consist entirely of males while close to half (47%) of such boardrooms have between one percent and 25 percent female representation. Which leaves eight percent with a female representation of between 26 and 50 percent.
And a mere one percent of LMD 100 corporates have a majority (i.e. more than 50%) female board of directors.
In cumulative terms, the share of female representation on the boards of the foremost listed entities in Sri Lanka amounts to a little less than one in 10.
As far as the sectors are concerned, land and property boasts the highest female board representation (38.9%), followed by investment trusts (20%), banks (14.1%), finance companies (13%), beverage, food and tobacco companies (12.8%), trading firms (12%) and telecom corporations (11.8%).
At the other end of the spectrum, construction and engineering, footwear and textiles, oil palms, plantations, power and energy, and stores and supplies have the dubious honour of not having any female board representation.
Notably, among the females on the boards of Sri Lanka’s leading listed corporations, several hail from families who have a controlling interest in them.
Given that females represent less than 10 percent of the boards of LMD 100 companies, there’s ample scope to work towards a more healthy gender balance in corporate directorships.
In line with this fact, Budget 2019 included a proposal to encourage more women’s representation in corporate boards – vis-à-vis a proposal for the Securities and Exchange Commission of Sri Lanka (SEC) to introduce the following: a voluntary target of 30 percent female representation on the boards of directors of companies listed on the Colombo Stock Exchange (CSE); quoted companies to disclose the percentage of women on their boards in their annual reports; listed entities that are unable to meet the voluntary target by 31 December 2020 to disclose relevant reasons; and companies to have at least 20 and 30 percent of board seats occupied by women by 31 December 2022 and 31 December 2024 respectively.
Indeed, there is hope… although only time will tell.