EY released its report on ‘Diversity in the Boardroom: progress and the way forward‘ highlighting its findings on the representation of women on Indian boards and emphasizing the actions organizations must take to increase gender diversity.
During 2013- 2022, India made significant and rapid progress in increasing women’s representation on boards from 6% in 2013 to 18% in 2022.
While India’s performance has improved, other countries are witnessing a strong push to increase gender diversity on their boards through various stakeholders. Similarly, the current 18% female representation on Indian boards is essentially a result of the Indian corporate law mandate.
According to the EY report, nearly 95% of the NIFTY 500 companies now have a woman on the board of directors. However, less than 5% of companies have female chairpersons, so there is still room for improvement.
According to research by the International Labour Organization (ILO) doubling the percentage of women in the workforce would raise India’s GDP to US$700 billion by 2025 and increase the growth rate from 7.5% to 9%.
Historically, the only positions available to women on Indian boards were leadership in the grievance and CSR committees. However, this is starting to change, and gender diversity on boards is increasing in Indian businesses.
Aashish Kasad, India Region Diversity & Inclusiveness Business Sponsor, EY India, said, “Women’s participation in the boardroom is a necessary but often overlooked step in achieving gender parity.”
“Increasing women’s representation on boards can improve company performance and also helps to promote greater inclusion and diversity within the workforce”, Aashish Kasad added.
Aashish Kasad further said, “This report emphasizes on the need for a concerted effort from the government and corporate sector to increase the number of women on corporate boards in India to address the challenges.”
Sectors performance on board diversity
- At 24%, the Lifesciences sector leads with the highest percentage of women on boards. As per the EY report, a sizable number of women promoters is one of the Key factors contributing to the high gender diversity on Lifesciences boards, both in executive and non-executive positions.
- Another sector where women’s representation on boards has increased significantly, from 14% in 2017 to 23% in 2022, is Media and Entertainment. However, the increase is not uniform across companies. According to the EY report, the increase is mainly due to a few organizations exceeding the mandated quota and hiring more women directors.
- Closely followed by the Media and Entertainment sector is the Consumer Products and Retail sector. From 1,29 in 2017 to 1,79 women on the boards of each organization in 2022, the sector has registered a noticeable increase.
- At 34%, the Technology (IT and ITeS) industry has one of the highest female representations. According to the EY report, the average number of women on Technology sector boards has increased from 1.19 in 2017 to 1.75 in 2022.
- Women’s representation on the board of Energy and Utilities sector (Oil & Gas and Power & Utilities) companies is stagnant at 15% in 2017 and 2022. As per the EY report, women’s participation in the Indian energy sector is a mere 8%, with only 600 women in managerial and executive roles.
Pankaj Dhandharia, Partner & Markets Leader, EY India, said, “The boards face new risks and priorities as a result of today’s unstable business environment.”
“The ability to make decisions, uphold corporate governance, and advance an organization’s long-term goals depend on diverse boardrooms. While it’s heartening to see the Indian boardrooms progress toward achieving gender parity, much more needs to be done”, Pankaj Dhandharia added.
Improving gender diversity on boards: role of different ecosystem constituents, Role of organizations
- Disclosure and transparency: The first step that an organization can take to improve diversity on its board and the broader organization is to understand the status of DE&I in the organization and share it with relevant stakeholders.
- Initiatives to retain and promote women employees: Organizations need to improve women employees’ work-life balance by offering them flexible working options.
- Build a pipeline of women leaders: Organizations need to build a pipeline of diverse candidates by looking beyond the conventional talent pools. While appointing new directors may seem risky, it can be a valuable strategy for developing future executives.
“As we strive to achieve gender diversity in the boardroom, the key question that needs to be addressed is whether we are creating a slate of women leaders who could take their place in the boardroom”, KV Kamath, Chairperson, NaBFID and former Chairman, ICICI Bank said.
“To me this can only be addressed by creating a gender-neutral workplace in which, recruitment, job opportunities and promotions are all done in a gender-neutral manner”, KV Kamath added.
KV Kamath further said, “Once this slate is in place, women leaders bring an innate capacity to lead and multitask. Multitasking is a unique skill which is natural to women leaders. This itself adds enormous value to the board. Further, women leaders also bring a whole set of different perspectives to the table.”
“Most importantly, they help break male-centred views which over a long period of time became embedded at the board. These then brings fresh approaches to the way the Board functions”, KV Kamath said.