(This article originally appeared in Lawyer’s Daily, April 12, 2021)
Not long ago, equal gender representation and policies facilitating gender equity were hardly more than nice supplements to company practice. Now, they are requirements for satisfying stakeholders and necessities for any business hoping to thrive or even continue on into the future. In light of the COVID-19 pandemic, maintaining these Diversity, Equity and Inclusion (DEI) practices is becoming even more critical.
According to the World Bank, the pandemic has had a disproportionate impact on women as they are “more likely to resign or take time off to look after their children due to illness or school closures… [and] even if they keep their position, they are at a higher risk of losing earnings.” A report from the Harvard Business Review also found that “Women represent 39 per cent of the global workforce but accounted for 54 per cent of pandemic-related job losses as of May 2020.”
With the pandemic heightening existing inequalities and threatening years of progress toward gender equality, investors, policy-makers and consumers are doubling down on how companies address gender issues. It is vital that in light of all this, corporate boards take action to combat gender inequities from the top down and champion progress.
Taking gender-progressive steps as a company is an excellent way to ensure well-rounded corporate strategies and informed perspectives. Companies lacking diverse decision-makers are starting to face the consequences of stale, homogeneous strategizing and in the elevated uncertainty of our current world, it is imperative that corporate boards generate bold, progressive ideas to maintain resiliency. In order to accomplish this, ensuring inclusivity on boards is an absolute necessity.
Aside from creating more versatile ideas, inclusivity is needed for boards to effectively harmonize with the wider societal network within which every business exists. To better serve the communities in which the organization operates, it is important to have a board of directors whose roster holds perspectives and the lived experience that reflects them. Thus, board members should be forthright in their effort to bring all dimensions of diversity to the table and bring a perspective that may not have existed previously. In other words, to exist symbiotically with the social environment and maintain a positive reputation, companies must uphold gender inclusivity through both their values and their leadership.
And it is this leadership that requires ever more focus. In 2019, a major report on gender representation on corporate boards released by Statistics Canada found that only 19.4 per cent of corporate board members in Canada are women. The gender gap on boards might be less extreme than what it once was, but this progress is at increased risk of reversal in light of the pandemic, and this poses major implications for women as well as for corporate success.
Lawmakers and stakeholders are increasingly making moves to bridge this gap. In January, Germany’s government implemented mandatory quotas for women on boards of large listed companies. Even prior to the pandemic, policy-makers have been taking more concrete measures to ensure equal gender representation among corporate leadership. In 2019, California dictated that “all locally headquartered publicly traded companies must have at least one female director,” and New Jersey, Massachusetts and Washington implemented similar quotas for public company boardrooms.
In the trail of prominent investors such as BlackRock, many investment institutions have indicated that DEI across the board and workforce will be a key engagement topic for many institutional investors across the 2021 proxy season. With increased regulatory and investor pressure to report on DE&I factors, it is essential that companies avoid a “tick box approach” and adopt proactive measures to build a business culture that is truly diverse, equitable and inclusive.
Of the 100+ global leaders surveyed in the Future Boardroom Competencies 2020 Report, a majority indicated a strong belief that DEI competencies will be foundational to effective board leadership in the 21st century. This belief is backed by overwhelming evidence that it will become increasingly impossible for companies to survive without properly addressing gender and other diversities within their organizational structure.
It is urgent that board members re-evaluate current protocols and practices and foster companies that actively prioritize diversity and diverse perspectives. In order to formulate effective strategies for inclusion, board members and company leaders must commit to a mindset of openness and continuous learning and take the initiative to participate in education and training that will provide them with the toolkit needed to approach these issues.
The world is learning just how valuable diverse leadership is — and if businesses don’t learn along with it, they might soon find themselves left behind as the ever-moving train of progress races on.Back To News & Views