Maybe the directors' club can relax a little. Policy seems to be running the way of more gentle persuasion than hard quotas for increasing the number of women directors.
While yesterday's report of a chairman's fear of Labor-imposed quotas hits a nerve in the club, the female invasion is more likely to be achieved by gentler means, starting with the Government's Corporations and Markets Advisory Committee report last year and foreshadowed in ASX Corporate Governance Council diversity recommendations proposed for this year.
Even the Women on Boards lobby group seems to be going along with the thrust of the ASX's recommendations – an “if not, why not?” disclosure of diversity targets for all levels of a corporation.
On the other hand, as recently as last month the Sex Discrimination Commissioner Elizabeth Broderick was reported as welcoming the news that the French Government plans to enforce a gender quota on that country's boardrooms, requiring women to make up half of the boardrooms of leading companies by 2015.
The CAMAC report on diversity on boards opposed the quota route:
“The governance structure of a corporate body, including the composition of any governing board, is essentially a matter for the constituent members or shareholders of that body. Given the ultimate responsibility of shareholders for the board which governs on their behalf, there would be obvious dangers in any initiative to cut across their choice and dictate elements of board composition.
“Rather than attempting to impose diverse board composition through a quota approach, effective change will depend on convincing corporate leaders and shareholders of the benefits of a more open approach to board selection. The putting together of a well-qualified and effective board, without overlooking candidates from a less traditional mould, should be promoted as a key step in the pursuit of good governance and corporate success. That goal is unlikely to be advanced by simply requiring companies to satisfy indicative measures of diversity.
“Targets for the appointment of more women to a board, or increased diversity by other measures, may be useful steps for a company that sets itself on such a course. However, for reasons similar to those given above, the Committee does not favour the setting of indicative targets for public listed companies across the board.”
In passing, CAMAC noted that various other demands placed on boards may mitigated against improved diversity:
“The increasing emphasis in recent years on the compliance role of directors may itself have led to more emphasis on direct business or related professional experience at the expense of other disciplines or personal backgrounds that may add to the overall perspective of a board. Similarly, the development of the notion of the professional director, leading as it does to multiple directorships, has the effect of limiting opportunities for those not yet recognised within that rank.”
The ASX Corporate Governance Council announced on December 7 that it proposed to expand its corporate governance principles and recommendations to require ASX-listed companies to adopt and disclose diversity policies on an “if not, why not?” basis.
There are those of us who must occasionally wade through turgid annual reports that chew up vast forests as they tick boxes meeting ASX governance principles and wonder if anyone reads the stuff, but the idea is there anyway. Being forced to disclose “their achievement against the gender objectives set by their board; and the number of women employees in the whole organisation, in senior management and on the board” will at least have the issue on the agenda.
That was enough to win approval from Women on Boards executive director, Claire Braund, who said the ASX had gone further than WOB had anticipated.
"It is an historic development that embeds gender clearly into our business processes at the highest level,” Ms Braund announced. “To comply with the principles and recommendations ASX companies will need to set measurable targets for gender and report their progress. The importance of this step cannot be underestimated."
And last week's Productivity Commission report on executive remuneration strayed into the boardroom diversity issue to attack quotas as applaud the ASX as well:
“While resorting to mechanisms such as strict quotas would risk promoting diversity at the expense of merit and hence company performance, the Commission strongly endorses the ASX Corporate Governance Council proposal for companies to report publicly on progress in achieving their own declared targets. Greater transparency around selection of board candidates regardless of gender should also be encouraged.”
With so much policy formulation against the quota approach and barely a voice raised in favour, the nation's private sector boardrooms appear safe from a government-mandated female invasion - at least while the “show and tell” alternative is given a go.
Michael Pascoe is a BusinessDay contributing editor.
