Are we on track for gender parity on boards in Singapore?
The push for gender diversity is not merely a fight for fairness or a move to favour women; it represents a fundamental shift towards dynamic and effective leadership
THERE is plenty to cheer about in the latest edition of the Singapore Board Diversity Review by the Council for Board Diversity (CBD).
Women made up 23.7 per cent of the boards of the 100 largest Singapore Exchange (SGX)-listed companies in 2023, a big jump from the 7.5 per cent in 2013. There were also improvements in female representation on Singapore’s statutory boards, having climbed to 32.7 per cent in end-2023 from 23.3 per cent in 2018.
Another positive finding is that more women were also appointed to board leadership roles, as chairs of boards, audit committees, nominating committees or remunerations committees. The proportion of board leadership roles helmed by women at the top 100 largest SGX-listed companies also nearly doubled to 17 per cent, from 9 per cent in 2018.
The increase in women on boards could be attributed to factors that include a genuine mindset shift towards diversity, equity and inclusion, as well as being inspired by the rise of a growing number of influential female leaders in the world today.
It could also be the result of a mix of external nudges in recent years, such as the board gender diversity targets introduced by the CBD, recent board diversity disclosure requirements for SGX-listed companies, and the nine-year cap for independent directors. Or, it could well be a mix of all the above.
The case for gender diversity
Board appointments should always be about appointing the most suitable candidates. However, the issue that runs deep, and yet does not get enough limelight, is that companies are not holistically considering their board candidates from a broader talent pool.
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The business case for diversity is clear – companies with more diverse leadership tend to perform better financially, as having a breadth of perspectives enables better decision-making. While diversity is not a new topic, measuring diversity is complex, with no one-size-fits-all approach for companies. Gender diversity is a crucial starting point; it stands out as a tangible indicator that can serve as a dipstick test of a company’s broader stance on diversity and inclusion.
Because gender diversity can be more easily measured and quantified, studies are able to produce clear findings which support the case for gender diversity on boards. For instance, McKinsey’s Diversity Matters Even More report in December 2023 showed that companies in the top quartile for board gender diversity are 27 per cent more likely to outperform financially than those in the bottom quartile.
When it comes to numbers, studies have shown that there needs to be sufficient critical mass of women on a board for it to reap the benefits of gender diversity. There are varying suggestions on what constitutes this critical mass, with some recommending at least three or more women on a board, while others suggest that 30 per cent or more of the board members must be women.
The path to gender parity
While the headline statistics for the 100 largest SGX-listed companies suggest that we are getting close to CBD’s wider target of 30 per cent by end-2030, it may be too early to declare a win. This is particularly so when we consider the CBD’s finding that 38 per cent of all 630 SGX-listed companies in 2023 still had no women on their boards.
And, if we are looking at gender parity or gender balance, where 40 to 60 per cent of the board are of either gender, only 12 of the 100 largest SGX-listed companies have achieved that.
Companies appear to have a common preference to appoint board members with experience as a chief executive officer, and this could be a hurdle towards board gender parity. The CBD report highlighted that 58 per cent of first-time directors appointed to the 100 largest SGX-listed companies in 2023 had CEO experience.
As a basis of comparison, only 6 per cent of CEOs in the world are women, as noted in Deloitte’s March 2024 report Women in the Boardroom: A Global Perspective. In Singapore, Deloitte noted a drop in the number of female CEOs to 11.9 per cent in 2023, from 13.1 per cent in 2021.
Clearly, there is still a lot to be done. The rate of progress towards gender parity is unlikely to increase significantly without a fundamental change in the way companies approach their leadership appointment process. The ecosystem as a whole – businesses, governments, civil society, and individuals – needs to recognise the importance of continued efforts behind the scenes that go towards supporting the needs of women at home and in the workplace.
What could help
First, while there are no regulatory gender diversity quotas imposed currently, companies should be encouraged to set their own voluntary board gender diversity targets and make this known publicly.
Setting and disclosing such targets sends a signal that the company is committed to this cause. The setting of such targets may also attract recommendations and expressions of interest from capable female candidates.
Second, there should be targeted support and development opportunities for women so that a sustainable pipeline of female leaders may be built.
One common remark is that it is often not about the lack of technical skills, but rather a confidence gap that hinders many women from progressing to leadership positions. This gap can be addressed by targeted development programmes, such as the Institute of Singapore Chartered Accountants’ (Isca) Board Mentoring Programme, which provides an ecosystem of mentors and networks to prepare senior women executive leaders for board service.
Boards should also challenge themselves in terms of the pace of gender advancement and ensure that women are moving up the ranks at the same time as their male counterparts.
Third, businesses should look broader. To be effective, boards need a diverse mix of individuals. Companies should consider not just CEOs, but also other C-suite executives, including chief financial officers, for board service.
By embracing a more inclusive approach and shifting the emphasis towards a diverse mix of skills, backgrounds and capabilities, companies can unlock a wider spectrum of potential leaders, fostering a culture of innovation and resilience essential for long-term success. For example, Isca’s Board Appointment Services seek to match organisations with professionals who bring diverse skills and experience.
Conclusion
This push for gender diversity is not merely a fight for fairness or a move to favour women, it represents a fundamental shift towards dynamic and effective leadership.
Injecting gender diversity within leadership not only provides fresh perspectives, but also encourages companies to look harder and dig deeper, ensuring a more robust appointment process. It also gives companies an avenue to prove their commitment to inclusivity and showcase their progressive and dynamic nature. If done well, this can be a strategic advantage in attracting top board-level talent.
Seah Gek Choo is boardroom programme leader of Deloitte Southeast Asia and Singapore, and Terence Lam is director for advocacy and professional standards at the Institute of Singapore Chartered Accountants
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