Gender Diversity on Hong Kong and Mainland China Firms’ Boards

According to MSCI, a financial indices and analysis tools provider based in the US, the number of women represented on the boards of listed companies in mainland China and Hong Kong has been increasing. However, it still falls behind that of their regional and western counterparts. MSCI’s latest report shows that as of October 4 last year, women held 14.8% of board seats in mainland China-based firms, which is higher than the figures of 13.8% in 2021 and 13% in 2020.

The report also reveals that for Hong Kong-registered firms, the ratio increased to 16% from 13.5% in 2021 and 12.7% in 2020. MSCI has been monitoring the gender diversity of corporate boards since 2009 by monitoring the disclosures of the 2,811 constituent companies of the MSCI All Country World Index. While these figures are on the rise, they remain lower than the 25% to 46% seen in western countries, Malaysia’s 31.6%, Singapore’s 21.6%, Thailand’s 19.3%, and India’s 18.2%. On the other hand, these numbers surpass Taiwan’s 11.9% and are comparable to Japan’s 15.5%.

MSCI reported a decrease in the number of companies without women on their boards. Hong Kong companies’ ratio improved to 17%, while mainland firms’ ratio dropped to 25%. However, they still lag behind Singapore, Japan, and India. The improvement in Hong Kong came after a new listing rule required companies with single-gender boards to introduce at least one female board member within three years. Greater board diversity can lead to better decision-making and governance.

There will likely be fewer all-male boards in Hong Kong in the next two years, but limited talent may restrict further progress. Globally, 24.5% of MSCI index constituents’ board seats were held by women, and only 5.8% had women CEOs. More improvement is necessary, especially since the number of female CEOs, who are crucial for board roles, remains low. Over the past decade, many jurisdictions have adopted quotas and disclosure requirements for women’s inclusion on corporate boards.

According to Kirti Lad, co-founder of the Women’s Directorship Programme, the increase in the number of women on boards in countries like France, Norway, Australia, and India has been substantial due to the imposition of quota targets and legal requirements. However, these measures have also led to some adverse consequences. For example, in Norway, where quotas were first introduced, some women were promoted too quickly to fulfill the quotas, and this compromised the quality of the appointments. In some other countries, quotas were enforced without a sufficient pool of experienced senior female executives, which resulted in succession problems.

In contrast, in Hong Kong, only 10% of companies disclose gender pay gap data, whereas the figures are 82% in the United Kingdom, 20% in Singapore, 12% in the United States, and 8% in Japan, according to a recent report by Equileap. The study evaluated 3,787 listed companies in 23 developed markets, and the gender equality data provider published the findings this week.

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