US-based 50/50 Women on Boards has reported a ‘historic uptick’ in board gender diversity at companies representing 25 of the largest initial public offerings (IPOs) of 2020.
Its findings revealed that women held 24% of all the top 25 IPO company board seats; up from 21.9% in 2019 and a 10% increase since 2015. Ten companies on the 2020 IPO list had three or more women directors, according to 50/50 Women on Boards. However, six companies among the largest IPOs of the year still went public with only one woman on the board; and one company went public with no women. Women of colour, however, still hold the fewest board seats; just under 5% across the Fortune 500 largest publicly-traded companies.
The organisation responsible for accelerating gender diversity on boards attributes the ‘historic uptick’ in women directors last year to institutional investors’ additional requirements calling on companies to diversify their boards. In 2017 and 2018, State Street Global Advisors and BlackRock spearheaded these requirements with voting proxy guidelines for companies to have at least one to two women directors. Last year, Goldman Sachs followed suit, announcing that it would not take a company public without at least one diverse board member.
PROMISING PROGRESS
“The progress made in board gender diversity among the top 25 IPOs is promising. But more needs to be accomplished in pursuit of diverse leadership,” stated Betsy Berkhemer-Credaire, CEO of 50/50 Women on Boards. “Having women on boards is good for business, from better profitability and productivity, to improvements in workplace culture. It’s unfair that publicly traded companies would deprive their shareholders of this business advantage. Respected shareholder voices like ISS and State Street will vote against directors of companies without diverse board members. There’s been considerable improvement for women on boards, but now we must focus on gender balance and diversity on boards.”
While 2020 presented pivotal challenges for women in the workplace, women’s advancement onto boards at the time of IPO continues to increase. Two well-known companies that went public last year with gender-balanced boards are Rocket Company Inc and Reynolds Consumer. Additionally, 10 companies on the top 25 IPO list of 2020 had three or more women directors. The top 25 companies that went public in 2019 also added 12 women by the end of 2020, accounting for 25.6% women on their boards. Notably, Lyft and Uber, which went public in 2019, achieved gender balance on their boards in 2020.
GENDER BALANCED DIVERSE BOARDS
The 2020 findings offer optimism for gender diversity on public boards. But there are still far too many companies entering public ownership, which are lacking gender balance and diversity. The 181-year-old Dun & Bradstreet did so with the dubious distinction of being the only company on the list to go public without a single woman on its board, pointed out 50/50 Women on Boards.
“We are pleased to see that there are more women on boards than ever before, but we must remain focused on the goal,” commented Malli Gero, Co-Founder and Vice-Chair of 50/50 Women on Boards, and author of the 2020 IPO gender analysis. “We’re not aiming for only a handful of companies to achieve greater gender diversity; we must work to establish gender balance and diversity as the norm on corporate boards. 50/50 Women on Boards remains focused on being a leading voice in this effort.”
Social and financial pressures are moving companies toward having more women on boards. In December 2020, Nasdaq filed a proposal with the Securities and Exchange Commission (SEC) to adopt new listing rules regarding boardroom diversity and disclosure. If approved, within four years, all companies listed on Nasdaq’s US exchange will be required to have at least two diverse directors; one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+, as reported.
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