The gender diversity agenda on company boards started as a regulatory push when The Companies Act, 2013 made it mandatory to have at least one-woman director on boards from April 1, 2014. As of end-March 2020, 28 per cent of NIFTY 500 boards have more than 20 per cent women as against 11 per cent in end-March 2017.
The findings are a part of the study "Corporate India: Women on boards" by advisory firm Institutional Investor Advisory Services (IiAS) and SBI Mutual Fund that evaluated the board composition of NIFTY 500 companies. Today, women directors account for 17 per cent (777) of the total directors (4,657) on NIFTY 500 companies' boards. Here too, multinationals have a higher representation of women at 19 per cent while PSUs trail behind at 11 per cent.
From all the different types of firms (MNCs, institutionally owned, promoter owned, etc.) PSUs continue to trail the gender diversity agenda. In the 4,657 firms in NIFTY 500, 13 companies do not have any women directors. Of those, 12 are PSUs. Overall, just 8 of the 71 PSUs have boards that comprise more than 20 per cent women. Despite improvements in the form of retention, maternity benefits, safety and security at the workplace for women in PSU's, there is a lack of focus on developing a female talent pipeline, finds the IiAS study.
Four enterprises-Apollo Hospitals Limited, Godrej Agrovet Limited, Godrej Consumer Products Limited and India Cements Limited-have five women on their boards, and another seven boards have four women each. Women have a higher representation on boards of firms in healthcare, consumer staples and realty.
Having a woman board member might have started as a check-box exercise for firms but over the years several boards seem to appreciate the value of diversity. Instead of having the mandatory one woman as Independent Director on the board, almost 44 per cent of NIFTY 500 companies have two or more women directors on their boards, against 21 per cent three years earlier. Ten per cent of the NIFTY 500 boards have three or more women on the board.
To continue with the regulatory push for gender diversity, since 1 April 2019, it is mandatory for firms to have at least one independent director on the board. 69 per cent of NIFTY 500 boards already had at least one woman as an Independent Director by 31 March 2017. Now, 93 per cent of NIFTY 500 companies have at least one woman as an Independent Director.
Women are now also getting a say on board composition and executive remuneration: Nomination and Remuneration Committees have the highest proportion of women at 18 per cent. Over the last three years, there has been an increase in women directorships as a share of board composition.
While board-level gender diversity is being addressed, lack of women in the rung below the board will continue to pose a gap. Companies need to look at developing the pipeline of women leaders and start initiatives especially at middle and senior management levels to ensure the drop-out rates reduce.
"While at the board level, gender diversity is improving, one of the challenges is gender diversity at leadership and middle management levels. This is a critical fix that corporate India needs to address: it is only then that gender diversity at the board level will become a natural outcome, rather than a focused fix," said Amit Tandon, Managing Director, IiAS.
European countries lead with women representations on boards being between 30-40 per cent. France and Norway have made it mandatory to have 40 per cent women representation on boards. In USA, women hold 20.4 per cent of board seats of R3000 companies, in 2020. In the UK, the 30 per cent Club achieved their stated target of a minimum of 30 per cent women on the FTSE-350 boards by 2020.