Corporates should pay attention to diversity and inclusion premium, say Malaysia's top execs
They can act as bellwethers to institutional investors of the quality of decision-making at board and management levels
Singapore
DIVERSITY, equity and inclusion (DEI) - and gender diversity, in particular - can act as bellwethers to institutional investors of the quality of decision-making at board and management levels.
Making the case for a "DEI premium" at a virtual event organised by 30% Club Malaysia on Wednesday (Mar 2), some of Malaysia's top corporate executives noted that DEI can be instilled in a company's culture at various levels - from mandating diversity quotas to making a conscious effort to choose the right words.
The 30% Club Malaysia is part of a global campaign led by corporate chairpersons and chief executives pushing to increase DEI at board and senior management levels.
According to the Corporate Governance Monitor 2021, published by Malaysia's Securities Commission, women held 17.7 per cent of board positions in listed companies as of October 2021. In the top 100 listed companies, women held 26.5 per cent of the board positions.
A study of Fortune 500 companies by Catalyst, a global non-profit advocating workplace gender equality, found that those with a higher representation of women on their boards outperformed their peers by 53 per cent in return on equity, and 42 per cent in return on sales.
Shahril Azuar Jimin, Maybank's chief sustainability officer, suggested companies put in place quantifiable DEI policies as part of their larger ESG (environmental, social and governance) plans. These policies should then be tracked, "religiously implemented", and made accessible to investors and consumers, Shahril said.
At Maybank, women make up 41 per cent of the top and senior management roles. But Shahril added that diversity is not just a matter of gender or race. There is also an increasing push for "cognitive diversity" to reduce the risks of groupthink, he said.
Chitra Hepburn, managing director and head of ESG for Asia-Pacific at index provider MSCI, said that in assessing a company's sustainability, her company - which is also a major ESG rating agency - looks at how much of a "core" focus the company has placed on ESG issues.
"When it's a tick-a-box exercise that is just being done to serve a purpose or fill a quota, I think that becomes pretty apparent very quickly," Hepburn said.
DEI criteria cannot be viewed in isolation from the company's business, leadership and corporate culture, she added.
"You'd have to look at how they are treating the community? How are they helping all their employees progress at the same level? How are they creating policies to help minorities? We look at all of these data points," she said.
A company's leadership plays a key role in fostering a culture in which employees can feel at ease about flagging inappropriate behaviours, said Albern Murty, chief executive of mobile service provider Digi Telecommunications.
"You need to build that culture where people are comfortable to give you that feedback... It's about making sure that the culture of the organisation is solid enough that anybody can come to you and say: 'That was a little bit of a strange comment, boss,'" he said.
At the same time, women candidates often need encouragement to step up to leadership roles - even when presented with the opportunities.
There can be various reasons for this lack of confidence, and management must understand each individual's circumstances in order to offer the right form of support, said Jalil Rasheed, group chief executive of Berjaya Corporation.
"Not everyone is scared that they can't do the job. Some of them are worried about travel commitments, so you could have flexi-work arrangements for them," he said.
Rasheed also advocates pairing men and women in mentorship arrangements "so that they can understand how each other operate", and as a way for male leaders to break out of their preconceived biases.
About 57 per cent of Berjaya Corporation's board is made up of women.
Corporate leadership must be the prime mover in forging a DEI resolve, Digi's Murty added.
Maybank's Shahril likened the DEI premium to diversity in the natural world.
He said: "In a biologically diverse forest, the complexity of that forest allows organisms to adapt to continually changing environmental conditions and to maintain ecosystem functions.
"Similarly, when organisations can deploy a range of perspectives and ideas, it allows for constant variation and experimentation with products and strategies, which is essential in maintaining fitness and staying future proof in a constantly changing environment."
