Martin Currie’s latest quarterly Stewardship Matters report, released on Monday, said that more diversity within a team creates an environment where “they are enabled to consider challenges from multiple lenses and perform better than teams that are less diverse”.
This covers everything from gender and cultural diversity, through to ethnic, socio-economic and even generational diversity.
The report cites a 2020 McKinsey study, Diversity wins: How inclusion matters, that found companies in the top quartile of gender diversity on executive teams were 25 per cent more likely to experience above average profitability.
David Sheasby, head of stewardship and ESG at Martin Currie, said: “Overall, visible D&I [diversity and inclusion] at a board level and in senior management echelons almost certainly strengthens a company’s image, enhances its ‘license to operate’, and sends an important signal to employees, suppliers and customers.
“It also positively contributes to organisational resilience and adaptability, and as such, is a key factor in how we assess the ability of a company to generate long-term financial returns.”
Gender and ethnicity are the two forms of diversity that receive the most attention but Martin Currie argued this only goes part of the way and that the real benefits come from considering diversity across multiple dimensions.
“As such, we need to see an evolution in the way companies manage and report on this both at the board level … but also more broadly across the workforce. This should aim to provide the transparency investors and other stakeholders need,” Mr Sheasby added.
The Australian Institute of Company Directors (AICD) released its latest quarterly Gender Diversity Progress Report in September, which showed that women now make up 35.1 per cent of directors in the ASX 200, up from 34.7 per cent in the previous quarter and 20.6 per cent as of 2015.
This increase in gender diversity did not extend to IPO board directorships, with only 12.2 per cent found to have been held by women between 2019 and 2022.
“Our last quarterly report highlighted the flow of new talent to the ASX 300, confirming what we know to be true — there is no shortage of qualified, board-ready women and there is simply no justification for boards to have no women at all,” AICD managing director and chief executive Mark Rigotti said.
“A renewed focus on IPO board composition by all involved in that process, including companies and lead managers, is required to improve the position — and we know from the progress achieved to date that focus gets results.”
