By: Turid E. Solvang, founder and CEO of FutureBoards
This post is from October 2024, and some of the content may be out of date.
On 12 December 2023, Norway was once again first in the world!
Twenty years after statutory requirements on gender composition were introduced for the boards of public limited companies (ASA), the Storting (the Norwegian parliament) has decided that the same rules will apply to private limited companies (AS). This comes ten years after the proposal was first put forward, and roughly as long as it took the European Parliament to adopt a corresponding directive for the boards of listed companies in EU member states.
Legislation is not a magic wand, either for equality or for improving the gender balance in senior executive positions. Even so, the decision will bring a 40/60 gender balance to the boards of the companies covered by the amendment – which is its main purpose. It is also a strong signal that the way boards are composed today is not sustainable.
A growing number of studies document that mixed-gender groups deliver better results, both financially and non-financially. BlackRock – the world’s largest asset manager – recently published the report Lifting financial performance by investing in women, in which one of the conclusions is that ‘overweighting companies that promote more women into senior roles would have enhanced a portfolio’s performance by 72 basis points per year over the benchmark (MSCI World Index), over the past four years.
McKinsey takes the same view in its annual report Diversity Matters. This year’s report stresses that ‘Diversity Matters even more’. …..the business case for diversity at the top levels of companies has only strengthened over time. Further, we can now also say with statistical significance that outperformance of companies with diverse leadership is strongly linked to positive holistic impact, particularly environmental and social outcomes—including a more satisfied workforce.
So let’s just agree that it makes sense!
Still, many are worried. There are not enough qualified women, we don’t know where to find them, it will be costly for the companies, boards will be filled with aunts, mothers and daughters, and so on. We have heard all these arguments before. Some 20 years ago.
The Storting’s decision has so far received little media attention, but an editorial in Dagens Næringsliv on 13 December reveals a depressing attitude by suggesting a board course as this year’s Christmas present for women. Well, yes, board courses are useful – for women and men alike, for newcomers and experienced board members alike – because board work has changed dramatically in recent years.
The challenge, however, is not that there are no qualified women, but that the recruitment processes are not good enough. That is why we offer assistance to companies that need both new board expertise AND gender balance. The aim is to put together a board that can help create value for both the shareholders and society. That is why we have boards.
Read more about FutureBOARDS