Unlocking potential: Board diversity can help drive business success

OVER the past few years, the corporate governance landscape in Singapore has evolved progressively, with board diversity being recognised as a critical lever for better decision-making. Mechanisms such as the nine-year rule and voluntary disclosures of diversity targets have encouraged boards to be more deliberate about their board refresh strategies.

In an era of rapid globalisation, socio-political shifts and technological advancement, the importance of diversity in the boardroom cannot be overstated. The recently launched 2025 Board Diversity Index sheds new light on the diversity landscape of Singapore-listed companies.

Developed by WTW in partnership with the Singapore Institute of Directors and James Cook University Singapore Campus, in consultation with the Singapore Exchange (SGX) and with support from the Accounting and Corporate Regulatory Authority, the index provides an updated analysis of board diversity across 553 companies with primary listing on SGX. Spanning large-cap, mid-cap, small-cap, Reits and business trusts, and Catalist-listed entities, the index assessed diversity against eight different attributes. These are: gender, age, board tenure, independence, culture, domain knowledge, international experience and industry expertise.

Signs of progress

This year’s study shows that considerable progress is made compared to the last one conducted in 2020 by WTW, with notable gains in areas such as gender diversity and board independence. It also celebrated 43 listed companies which have exhibited exemplar diversity standards across four or more of the attributes.

However, there is still room for improvement, particularly for related small-cap and Catalist companies, notwithstanding the limitations they face due to smaller board sizes.

1. Gender diversity: Companies with more than 30 per cent women directors have doubled, rising from 8 per cent in 2020 to 17 per cent in 2025. Women now hold 17 per cent of all board seats, up from 10 per cent in 2020, yet there still are 197 companies with all-male boards.

2. Age spread: Boards with an age spread of 12 years or more, representing views across multiple generations, saw a slight increase, from 21 per cent to 22 per cent. The average age of directors was 60 years, with 163 companies having at least two directors under the age of 50.

3. Tenure diversity: Companies where tenure spread of non-executive directors was between 3.5 and 5.5 years (averaging around the midpoint of 4.5 years), grew from 13 per cent to 17 per cent. This reflects a better balance between fresh perspectives and experience. Average tenure of non-executive directors was 5.9 years, down from 6.3 years in 2020.

4. Board independence: Companies with 75 per cent or more independent directors rose from 9 per cent to 13 per cent, with independent directors now comprising 56 per cent of all board seats.

5. Cultural diversity: Companies with more than a third of their directors from non-majority cultural backgrounds dropped from 18 per cent to 14 per cent. Around 15 per cent of all director roles were filled by non-dominant ethnicities.

6. International experience: Boards where 80 per cent or more directors have international experience fell from 15 per cent to 12 per cent, although nearly 30 per cent of non-executive directors bring international and global perspectives.

7. Domain knowledge: Companies with five or more distinct areas of domain expertise represented on their boards more than doubled, from 14 per cent to 29 per cent. Nearly half of the directors had accounting or legal backgrounds.

8. Industry expertise: Boards with five or more different types of industry experience grew from 15 per cent to 33 per cent. Financial services and professional services were the most prevalent industries; which in turn tend to have exposure to multiple industries.

Cognitive diversity, inclusivity

In today’s volatile global environment, companies need boards and leadership teams that reflect a broad spectrum of experiences, perspectives and capabilities to navigate complex challenges and seize emerging opportunities. As a global hub with deep international connections, Singapore must continue to embrace diversity as a core tenet of corporate governance to maintain its competitive edge and attract investors seeking sustainable and innovative businesses.

Beyond demographic metrics, boards must cultivate cognitive diversity, the inclusion of diverse thought, perspectives and experiences. One of the limitations of the Index is that it only measures publicly disclosed physical and experiential attributes of diversity. However, other preconditions of cognitive diversity, such as social upbringing, educational background, leadership styles, and decision-making approaches, are equally critical.

A strong culture of inclusion, where different voices are represented and respected, is a strong enabler of cognitive diversity. Boards must create environments where diverse voices are not only heard but also respected and valued.

An inclusive boardroom culture ensures open dialogue and active participation, enabling directors from different backgrounds to contribute effectively. Companies must also integrate women directors into meaningful leadership roles by appointing them to key committees and eventually as chairs. This ensures their perspectives are not sidelined but actively shape strategic decisions.

Diversity as a strategic imperative

While some markets, such as the US, have seen a pullback from diversity, equity and inclusion (DEI) goals amid shifting political and social dynamics, the imperative for board diversity in Singapore remains strong. Board diversity should not be seen as just a moral obligation nor as a compliance checkbox, it should be viewed as a business necessity.

Companies will do well not to conflate diversity with preferential treatment. Diversity is about cognitive diversity of thought and experience to help better decision-making. To do this, all directors, including women directors, must be appointed on merit and have an equal voice in the boardroom.

There is no prescriptive form of diversity and each board should do the right thing to support their company’s objectives. As the business environment grows increasingly complex, the ability to harness diverse perspectives will be critical to long-term success.

As Verna Myers, a renowned diversity advocate, aptly said: “Diversity is being invited to the party; inclusion is being asked to dance.” By fostering both cognitive diversity and an inclusive board culture, Singapore companies can create environments where all directors contribute meaningfully, driving better decisions and sustainable growth.

The writer is global leader, Executive Compensation & Board Advisory, at WTW