Boosting board diversity: Crossing the 30% threshold
The idea that corporate boards should better reflect society’s diversity has gained traction in recent years. Indeed, you’d be hard-pressed to find a major company or business leader who hasn’t expressed support for including more women on boards. And while diversity efforts have produced meaningful results, progress remains slow. That’s why, in 2017, we joined the 30% Club, a global, business-led effort to increase the number of women on corporate boards. At the time, 15% of all corporate board seats globally were held by women. Consistent with our partnership in the 30% Club, Ontario Teachers’ committed to having 30% representation across all of our private-company board seats by the end of 2022. Given the overall pace of change, we’re proud to say we reached that milestone one year early.
How did we do it? We began by setting timebound targets for our 100-plus portfolio companies to add women directors, believing deadlines would help speed up change. We also embraced a new approach to assessing potential directors. Regardless of gender or background, we look for candidates who possess clear leadership skills, have led a business with profit-and-loss responsibility, and who’ve demonstrated the ability to navigate complex stakeholder environments. But we’ve come to believe that the requirement for past CEO experience, or even cumulative years of senior professional experience, might be standing in the way of identifying strong candidates. Making our criteria around professional experiences more precise helped us source some outstanding women directors.
Our efforts haven’t stopped with our private-company holdings. We’re also pushing for more board diversity at the many public companies we invest in. In early 2023, we updated our proxy voting guidelines, asking large-cap companies in developed markets to aim to raise the number of directors identifying as women to at least 40%.
Increased representation of women on boards is about equity. It’s also sound business sense. Research suggests that companies with more equal gender representation do better on financial measures and score higher on corporate-governance indicators like disclosure and corporate social responsibility.
Since we joined the 30% Club in 2017, the number of board seats held by women globally has improved to almost 20% from 15%. In that context, we’re especially proud of having reached our own 30% goal ahead of schedule. We recognize that more work remains, both for Ontario Teachers’ and the broader business sector. That includes ensuring that other underrepresented groups, including visible minorities and those who identify as 2SLGBTQ+, also get a seat at the table.