Business

Women are gaining more board seats, holding 29% of director seats in 2022.

Thomas Barwick | Stone | Getty Images

Women currently occupy less than a third of corporate board seats, despite evidence that gender diversity in boardrooms can lead to higher credit ratings and improved stock returns.

Women are gaining strength in the boardroom. According to Moody’s Investors Service, 29% of board seats in North American and European companies were held by women in 2022, up from 24% two years ago. The data showed that among North American companies, the proportion of women on boards of directors rose from 22% to 27%.

A company’s board of directors has significant influence over the company’s business operations, including setting policy, overseeing assets, and hiring and managing executives. A higher proportion of women on boards of directors correlates with higher credit ratings, according to Moody’s.

“We view the presence of women on boards and the diversity of voices they bring as support for good corporate governance, which has a positive impact on creditworthiness,” the rating agency said.

Meanwhile, oddly enough, stocks of companies with low representation of women on the board of directors performed worse.

According to Doug Morrow, director of ESG strategy at BMO Capital, Canadian oilfield services company Calfrac Well Services, natural gas producer Canacol Energy and Ontario-based investment firm Morguard Real Estate Investment Trust are the least gender-diverse. Markets. All three companies have lagged behind their industry performance over the past year.

“While there is no clear link between gender diversity and stock returns, we believe that diverse organizations offer inherent advantages over non-diverse ones and are better prepared to compete and excel in the long term,” Morrow said.

Government mandates and pressure from large institutional investors have pushed for gender diversity at the board level over the years.

In California, more than 600 public companies are now required to have a minimum number of women on their boards or face fines of up to $300,000. Large institutional investors such as Vanguard and BlackRock have a history of voting against all-male board directors.

Meanwhile, the Securities and Exchange Commission approved new Nasdaq rules that would require most US companies to have at least one female director in addition to another board member who identifies as a member of a racial minority or LGBTQ community.

However, women have historically been inferior to men in power and influence at the board level, especially in the energy and natural resource industries.

“Improving diversity in these industries, as well as in the mining industry, has been a long-standing goal, and it is not clear that the status quo has changed significantly in recent years,” Morrow said.


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