The Australian Council of Superannuation Investors (ACS)I has released a new voting policy aimed at promoting gender balance in Australia’s listed company boardrooms.
Nearly a decade after ACSI launched its drive for women to hold at least 30% of ASX200 board seats, women now hold almost 36% of all ASX200 directorships. In 2015, women held just 19.7% of ASX200 board seats.
The new voting policy takes effect from July 2023 and extends to the ASX201-300, in which women hold an average of 34% board seats.
“It’s positive to see the significant shift towards greater board diversity in the ASX300. For investors, this means boards are accessing a larger talent pool which provides more diverse skills and backgrounds to draw on,” said Louise Davidson, ACSI CEO.
“However, these averages mask a lack of progress in many companies, such as the 97 companies in the ASX300 which fall below the 30% mark.”
The policy could see those companies facing recommendations ‘against’ male director re-elections if women do not occupy a minimum of 30% of board seats. ACSI and its members are also encouraging companies to develop a timeframe within which they will achieve gender balance (40:40:20) on their boards.
“Having 30% gender diversity on Australian boards has shifted from a target to aspire to a minimum standard. We have updated our policy to recognise market standards and support continued improvement. There’s a fair way to go – even in the top 200 companies there are still 54 who fall below 30%. Ultimately though, we hope that this policy becomes obsolete in the next five years as Australian companies build and maintain gender balanced boards,” Ms Davidson said.
“The old excuse was that there weren’t enough women with ‘appropriate’ qualifications, but Australian boards have dispelled that argument – so far this year, 45% of board appointments have been women.”
As the representatives of long-term investors, ACSI supports the efforts of ASX-listed companies to build and maintain diverse boards. ACSI believes that boards should be sourced from the widest possible pool of director talent and made up of individuals who not just work together effectively, but also bring diversity of thought to board decision making to build and maintain a viable, profitable and efficient company over the long-term. Properly structured boards draw on a range of criteria, including gender, ethnicity and age, in addition to core skills and experience.
In applying its updated policy, ACSI may recommend during the 2023 AGM season that its members vote against existing directors of ASX300 companies with poor gender diversity, with a focus on those most accountable for board succession and composition.
“As always, our voting recommendations will be combined with direct company engagement and applied on a case-by-case basis. While around 100 companies could currently face ‘against’ recommendations, we believe that, following engagement, the number will be much smaller,” Ms Davidson said.
“We hope that by working with companies to drive change we will see further progress and commitments. However, recommendations will be made against companies which make no progress at all.”
ACSI has written to ASX300 companies advising them of the new policy.