Market Monitoring - 03/09/2019

Gender Equality in the Management: what to do about it?

The subject of gender equality has been exhaustively debated for some time now, but what is the missing piece for women to increasingly occupy positions of leadership in companies?

Studies show that gender diversity in business can positively impact the business results. To mention a few examples, MSCI found out that the companies in its global index that are  led by women had a higher ROE than the others. In a recent McKinsey study, gender parity in the labor market could add US$12 trillion to the global GDP by 2025. According to GPTW’s survey, the revenue of companies with the Great Place to Work label that have female CEOs grew over 11%, compared to the 2.6% growth for GPTW Brasil’s companies in 2017.

Something that can’t be forgotten is the need for gender diversity in the most important decision-making body of companies. In a survey carried out by IBGC in 2016, women accounted for 7.9% of sitting members of the boards of B3-listed companies. In a study carried out in 2018 by Spencer Stuart only with companies listed in the special segments of B3, 9.4% of the BoD seats were occupied by women. Despite the low representation, women’s presence has steadily increased since 2015, when the same survey showed a 7.2% representation. The segments of Industry, Consumer Goods and Services and state-owned companies have the highest average number of women in their boards. Technology, Media & Telecommunications is the segment with the lowest number. The same study shows that Norway is the country with the highest representation of women in boards: around 45%.

In an event held on the International Women’s Day, B3, together with approximately 60 other stock exchanges around the world, carried out the event Ring the Bell for Gender Equality in partnership with UN Women, Global Compact, Sustainable Stock Exchanges Initiative (SSE), International Finance Corporation (IFC), Women in ETFs (WE) and World Federation of Exchanges (WFE) to promote gender equality and sustainable development. The event discussed what is being done, the advances made over time and the benefits to institutions from several angles: board of directors, corporate practices, investors, financial products and capital market development. B3’s chairman Gilson Finkelsztain said at B3’s event that it will take two centuries to end the gender inequality in the world.

To answer the question at the beginning of this text, the IBGC, Women Corporate Directors and IFC created the program Diversity in Boards, an executive training program that focuses on increasing the presence of women in boards. In 2019, the 4th edition of the program will be carried out, now with B3 as supporter. From 2015 to last year, 68 participants have concluded the program. Training is one of the main paths for women to increase their presence in senior positions.

Another path, a bit more controversial, refers to quotas and minimum requirements. Norway, for example, the country with the highest female presence in boards, has rules that governs the participation of women in boards of directors, according to a survey by the Association for Psychological Science. Daniela Sabbag, DRI of Grupo Pão de Açúcar, report at B3’s event that GPA has policies related to this matter, establishing that ⅓ of the finalists for leadership positions must be women. The company already has over 40% of female leadership in corporate positions.

Another initiative along these lines is the movement 30% club. Born in the United Kingdom, the purpose is to reach the percentage of at least 30% of the positions in boards occupied by women, an initiative of the companies themselves to the detriment of mandatory quotas. The movement has stages and, since the end of 2018, has set goals for Brazil: Novo Mercado companies, which until 2017 had around 70% of boards with no women, must zero this number by 2020; and B3-listed companies overall must have at least 30% of board of directors and C-level positions occupied by women by 2025. Now we’ll wait and see if Brazilian companies will join this movement and formally adopt these goals.

The professionalization of the Board of Directors and the ongoing promotion of female leaderships should generate a corporate culture that it’s more likely to welcome and conventionalize women occupying key positions in organizations. What is important for companies, its stakeholders and society as a whole is for the best people to reach management positions to carry out the task that matters the most: generating value for companies.

Written by Isabela Perez