Michele Leung, Green Finance Advisor of Friends of the Earth (HK)

Companies today recognize the strategic imperative of diversity, and gender inclusion in capital markets is a crucial aspect of this. Research suggests a strong correlation between the presence of women on corporate boards and positive financial performance, though a direct causal link has yet to be established.  One study also found that companies with sustained board diversity – boards with at least three women for at least three years – also exhibited better ESG Ratings, primarily on the basis of their environmental strengths.

Of course, it’s not just about the numbers. The value of gender diversity extends beyond financial gains, it could help companies leverage a greater pool of talent in their leadership succession planning, better positioned to find the right mix of expertise and backgrounds to weather the storms and take advantage of emerging opportunities in a rapidly changing world. 

The recent Women on Boards (WoB) progress report[1], an annual report highlights trends across markets and sectors for large- and mid-cap companies, provides an overview of the state of diversity on boards and in other corporate leadership roles. In 2023, it is observed progress on diversity continued, but at a slow pace. Women held 25.8% of board seats at large- and mid-cap companies, rose 1.3% from previous year, but growth slowed. Boards were more diverse than executive suites, both in terms of gender and ethnicity.  Only 9.1% of board-chair roles were held by women. Although the number is still very low, this percentage has more than doubled since 2019.

It’s encouraging to see the overall percentage of women on boards among APAC companies continue to trend upward in 2023, women held 18.2% of board seats in 2023, up 1.6% from 2022. Australia (40.8%), Singapore (25.3%), Hong Kong (19.0%) recorded the strongest improvement among APAC markets, for Hong Kong, female representation at corporate boards increased by 3% or more. The improvement was fueled in part by the regulatory measures introduced in a few markets that aim at promoting diversity practices.

Capital market plays an important role in supporting the development of gender-focused investment products. For example, in Japan, women are a historically under-utilized resource, and studies have indicated that their greater participation and advancement in the workforce could have substantial benefits for the economy. With the stagnating economic development in Japan, the Japanese government has set out explicit goals to increase women’s participation and promotion in the business world. It then drives the demand for exposure to companies that are promoting and maintaining gender diversity among their workforce, as well as the related investment products.

Looking ahead, regulators and investors shall continue to broaden their focus beyond gender diversity, and evaluate a company’s performance in gender pay gap, female representation at other senior leadership roles, as well as the transparency of associated policies, targets and progress.


[1] Women on Boards and Beyond: 2023 – MSCI