The number of women holding board positions in ASX 200-300 listed companies sharply declined by 12 per cent in 2023, raising concerns about existing recruitment processes for directors.
A new report has found that between 2022 and 2023, female representation on smaller Australian company boards fell from 44 per cent to just 32 per cent.
And while the representation of women on ASX 300 boards has risen to 36 per cent in 2024, 13 of the top ASX 300 boards have no female directors. This shows minimal difference from last year when 15 of the top ASX boards didn’t have any female directors.
The data comes from the Governance Institute of Australia and Watermark Search International’s 2024 Board Diversity Index. Launched a decade ago, the index is the only comprehensive analysis of Australian boards that measures diversity across Australia’s 300 ASX listed companies in five areas: gender, cultural background, age, skills/experience and independence.
“The recruitment of directors has become trapped in a cycle of repetition and reliance on the same outdated processes and skills matrices no longer suited to contemporary demands,” said Governance Institute of Australia chair, Pauline Vamos, about the data.
“It is imperative that we break free from this inertia, innovating our approach to sourcing talent and redefining the criteria for leadership excellence in today’s dynamic environment.”
However, in positive news, boards are progressing toward achieving the 40:40:20 rule by 2030, meaning they’d have boards made up of 40 per cent female leadership, 40 per cent male leadership and 20 per cent of any gender. This year, 123 boards (41 per cent) hit the 40:40:20 target.
Looking at other measures of diversity, the index shows only four directors on the ASX 300 are openly LGBTQI+ and there is no data on directors with a disability.
Only 9 per cent of directors are from non-Anglo-Celtic backgrounds, revealing that there are now more white directors than seven years ago (91 per cent). And there hasn’t been a change to the number of First Nations directors which remains at four, although they now occupy an extra board seat with a total of seven.
The average age of directors has risen slightly to 61. However, directors aged under 50 have fallen since 2021.
Most significantly, younger women in director positions have fallen from 17 per cent to 11 per cent.
Meanwhile, the chair tenures of 20 years and beyond are rising to 7.8 per cent, up from 4.1 per cent in 2019. But the most common chair tenure is 4-9 years.
Pointing to the concentration effect as a concern, Vamos said that the trend of longer chair tenures is acting as a blockage to new opportunities for talent.
“Chairs play a pivotal role in addressing and reporting on all aspects of diversity, but it is still very much a ‘do as I say, not as I do’ mentality,” Vamos said.
“Boards need to become better at envisioning what the organisation might look like in five, ten years’ time and start planning now for the type of board ‘personality’ required to get there.”