The new rule – which is subject to Financial Markets Authority approval – will require companies listed on the NZX Main Board to provide breakdown of the gender composition of their directors and senior executives in annual reports with balance date on or after 31 December 2012. It will also require listed companies to provide an evaluation of their performance if they have formal diversity policy.
“This initiative reflects the value of building greater diversity on boards, starting with gender diversity that is fast gathering momentum across the senior echelons of our private sector,” says Kim Ngarimu, acting chief executive of the Ministry of Women’s Affairs.
EEO Trust’s chair Michael Barnett says NZX’s move makes good business sense. “I hope this motivates more companies to look at their boards and realise how few women they have around the table and make some changes as long as appointments are made on the basis of merit.
“The Trust does not want companies to employ woman at senior level because they feel they should – there are plenty of highly qualified women who can make positive difference to the company’s culture and bottom line.”
The NZX initiative follows the launch of the 25 Percent Group last month and the inaugural 2012 Mentoring for Diversity programme established last year by the Institute of Directors, both of which aim to increase the number of women on listed and large company boards.
The 25 Percent Group, made up of the chairs, directors and chief executives of 12 leading private and public sector organisations in New Zealand, is committed to achieving 25 percent female participation on private sector New Zealand boards by 2015.
Ngarimu says the 25 Percent Group, supported by the Ministry of Women’s Affairs, has established website to provide access to research and practical advice on how to improve gender diversity at board level (www.25percentgroup.co.nz/).
“The Ministry will also be providing practical help on the implementation of the Diversity Listing Rule through its continued work with NZX on the development of guidance note for companies,” says Ngarimu.
“Together, initiatives such as these will lead to more opportunities for women on boards and to improved corporate performance. They will also unleash future opportunities for women in wider range of senior leadership roles.”
The Diversity Listing Rule follows consultation process with NZX market participants in April and May. NZX says there is credible research-based evidence which suggests that diversity – and gender diversity in particular – at both board and senior management level contributes to improved performance.
However, it says it is also conscious of the need to balance provision of information to investors with the ongoing compliance costs to companies and it hasn’t made it compulsory for companies to develop formal diversity policy.
“It’s important that we give our listed companies the flexibility to make their own decisions about whether such policy is priority for them at this stage,” says NZX CEO Tim Bennett. “Obviously, over time, we’d like to see more listed companies taking the opportunity to report on diversity as contributor to investing decisions made by shareholders.”
At present, the Ministry of Women’s Affairs says women hold under 10 percent of private sector directorships in New Zealand. The majority of NZX’s top 100 companies have no female directors and women account for 21 percent of management positions reporting directly to chief executives.
