What’s the state of global boardroom diversity in 2022? The answer to this question depends on what part of the world you’re looking at — and which aspect of diversity.
Diligent recently undertook a comprehensive review of today’s boards, using proprietary data, third-party research and talking to directors themselves from across the globe. We looked at data on how gender, race, LGBTQ+, age and skills diversity play out. We also explored how different aspects of diversity intersect — for instance, when boards onboard more female directors, they often diversify their boards along multiple characteristics at the same time.
Highlights follow from Diligent’s landmark report.
Skill-Based Diversity Is in Demand
What’s the most the most important aspect of board diversity today? Having a range of perspectives, according to Diligent’s research. Nearly half (48%) of directors look at filling a specific area of expertise for new board members rather than purposefully seek a candidate based on race, gender or age (15%). Furthermore, 46% of newly appointed directors in 2022 bring a skillset background other than CEO, CFO or COO.
Female directors are more likely to bring expertise in areas such as technology, legal issues and sustainability. In fact, we found that three times as many female directors have professional backgrounds in sustainability- and ESG-related roles compared to men.
Progress on Gender Diversity Varies by Region
Gender diversity has increased worldwide over the past several years. Today, 27% of board seats worldwide are held by women. Catalysts for the surge include regulations, legislations and quotas--such as France's mandated quota of 40% female directors--not to mention increased disclosures.
Yet the picture gets more complicated with a closer view. While female board representation averages 31% for companies in Europe and the UK, this figure is only 14% in Asia. Wide variation exists across countries. Take, for example, the nearly 40% female board representation in Sweden and France compared to representation of less than 25% in Greece and Luxembourg. And India is an outlier in Asia. Here female directors occupy 18% of boards seats, and 70% of the nation’s 50 largest companies have either two or three female directors.
Countries are making progress at different paces, and from differing starting points. In Canada, 41% of new director appointments through May 2022 were female, following 45% in 2021. On the other side of the world, the UAE’s efforts to improve gender diversity in the boardroom have led to more women directors: 8.9% in 2022, up from 3.5% in 2020.
Overboarding — or one director holding multiple seats — further skews the view of progress. In Australia, for example, female directors hold approximately 30% of board seats, a five-percentage point increase since 2019. Yet Australian boards may be tapping the same women for open board roles: 42% of female directors hold three or more board seats compared to 18% of male directors.
Overall forecasts for board gender diversity can feel slow. At the current growth rate, it’s estimated that European boards won’t reach the 40% female representation required by the European Commission for another decade. Yet boards are diversifying by gender faster than other areas of executive leadership. Among 668 listed European companies, women held less than one fifth (19%) of all executive leadership roles — and only 7% of CEO roles.
Emerging Connections Across Gender, Age, Tenure and Skillsets
Interesting intersections and connections emerged throughout the research. Consider board tenure. While average tenure has increased since 2019 for both men and women, female directors tend to have shorter tenures than their male counterparts.
Why is this the case? Female directors are more likely to be non-executive or independent directors — about 84% of women compared with only 59% of men. Driving this trend: Men are more likely to ascend into an executive board position from a C-suite role while women more likely to join the board from outside of the organization.
Diligent’s research also revealed interesting interconnections across age and skill sets. Japan reports the world’s oldest directors, with more than half 65-70 years old. Most of these directors have skills in finance, with relatively few backgrounds in technology or sustainability.
Malaysia and Singapore, by contrast, report younger board slates. In fact, more than one-third of companies in these two countries have two or more directors under age 50. Almost all directors have business management, accounting and legal backgrounds — with some boards adding expertise in areas such as technology, investment banking, M&A, public relations, human relations and risk management.
Lagging Progress in Racial/Ethnic Diversity
Racial/ethnic diversity on S&P 500 boards increased by a mere one percentage point from 2021 to 2022. Among the 22% of directors who are racially/ethnically diverse:
- 11% are Black/African America
- 5% are Hispanic/Latino(a)
- 6% are Asian
- Less than 1% are American Indian/Alaskan Native
- Less than 1% are Native Hawaiian/Pacific Islander
- Less than 1% are multiracial
Overboarding and underreporting may skew these figures even more. In 2020, over 40% of Black/African American directors were serving on multiple Fortune 500 boards. Furthermore, disclosures in countries like the United States are mostly voluntary, meaning that the companies providing the racial/ethnic makeup of their boards tend to have more progressive policies in place.
Yet there have been some encouraging areas of progress. Today 31% of Fortune 1000 companies have a Latino director, up from 13% a decade before, and approximately 90% of FTSE 100 companies now have at least one board member from an underrepresented racial or ethnic group.
LGBTQ+ Data Is Limited
Finally, it’s difficult to get a picture of LGBTQ+ diversity in the boardroom because very little data exists in this area outside of the United States. Reasons may include regional differences when recognizing and tracking LGBTQ+ status, personal privacy challenges for these disclosures and stigma and cultural disparities surrounding LGBTQ+ acceptance.
Among Fortune 500 companies, members of the LGBTQ+ community hold only 26 of 5,670 (0.5%) board seats — with several seats held by the same person. And only 23 companies currently have LGBTQ+-inclusive board policies. In an encouraging note, however, this figure is nearly double the number from 2021.
Delve into all the findings. Download the full report today.