Board Diversity: More than a Gender Issue?
There has been a lot of research conducted on the importance of corporate governance around the globe. A number of common factors, whether based on a common law or civil code systems, seem to demonstrate that longevity and sustainability does arise from quality corporate governance. However, the evidence is not as clear when a correlation is shown between a particular organisation’s governance structure and practices versus its share price. Around the world the question of board diversity is gaining a much more important and critical view point. The beginning of the debate in the 1960s and onwards has been around gender. Although an essential debate to have, it is not the only part of diversity that should be considered. Also, race, culture and even age may have a direct impact on the structure of a board. Australia, particularly in ASX listed entities has a poor record of any type of diversity. The USA and Europe have a much wider range of policies to promote diversity across boards. Finally, the key question is how best to regulate to promote diversity across gender, race, culture and age? The historical approach of setting targets and disclosure do not seem to have made major inroads for change. Is it the right time to impose mandatory requirements or are there other alternative strategies? Without doubt change is required, but there will be opposition.