Who cares about gender equality on boards? Not institutional investors, according to a damning report from Hermes. The fund manager’s latest Capitalism Survey revealed that less than a quarter of institutional investors believe female representation at board level to be important.
Harriet Steel, head of business development at Hermes said: “There is some way before the glass ceiling is cracked in the board room and on issues of pay. There have been a number of high-profile campaigns to improve diversity on boards, notably from groups such as the 30% Club. However, while these campaigns have achieved some progress, it is clear UK plc is still poorly diversified at senior management level."
Her views are backed up by the recent Davies Review Annual Report 2015 - ‘Women on Boards’ - which shows the number of women holding executive level positions has only increased from 5.5 per cent to 8.6 per cent in five years.
There also remain significant gaps on pay. Female bosses earn around three-quarters of what their male colleagues earn, according to the Chartered Management Institute, with the average pay gap between men and women aged between 46 and 60 sitting at £16,680. The shocking disparity is even more pronounced at director level.
Ms Steel added: “The main goal of board independence and diversity of experience is not simply to tick a corporate governance box. It is to avoid the pernicious and value-destroying practice of ‘group think’. The perils of this type of culture have been seen in corporate scandal after corporate scandal – Enron, Barings, sub-prime loans, the banking crisis, to name just a handful. It may be convenient for the members of a board to think in the same way, but it is rarely good for business”.
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