Female representation on ASX300 boards up slightly while LGBTQ+ numbers jump from low base

The 2024 Board Diversity Index from Watermark Search International and the Governance Institute of Australia reports female representation is up slightly from 35 per cent last year, while the share in smaller companies (ASX200-300) has also risen by one percentage point to 32 per cent. 

The 755 board roles currently filled by women compares to 399 in 2016, while this year 123 boards - or 40 per cent - have hit the 40:40:20 target (40 per cent men, 40 per cent women, 20 per cent flexible) promoted by the Chief Executive Women and the Male Champions of Change in 2019. 

Directors from culturally diverse backgrounds occupy the same number of board seats as last year at 183, representing 9 per cent.

The number of Indigenous directors has remained the same at four, while the report states that the share of Anglo-Celts has increased slightly over recent years to 91.2 per cent.

In a similar report two years ago there were flaws identified in the researchers' methods in classifying people as 'Anglo Celtic', whereby the diverse background of a director with mixed Asian ancestry and a European surname did not come up in the statistics. Business News Australia sought clarification from the authors as to whether its methodology for determining cultural background has changed since then, and a spokesperson said there had been no changes. 

The number of LGBTQ+ directors rose by two-thirds between 2023 to 2024, reaching 20, although this still only represents 1 per cent of all directors versus 8 per cent of the general population.

Only four directors openly identify as LGBTQ+ in publicly available reports, but the authors highlight research by the Australian Association of LGBTQ+ Board and Executive Inclusion (ALBEI) shows the number is actually five times greater.

"In the last year there has been little improvement in the stubbornly low representation of underrepresented groups across the ASX200 – and several groups are only represented through self-disclosure," ALBEI co-founder Mark Baxter wrote in the report.

"ALBEI research of boards in 2023 found a slight increase in LGBTQ+ community members reported on boards, though this is likely to be more from self-disclosure than an improvement in overall representation.

"At the board and C-suite level there is often disinclination to self-disclose whether someone is a member of the LGBTQ+ community, has a working-class background, or a disability. This suggests Australians still face cultural issues in admitting 'difference'."

Baxter noted that only two companies in the ASX200 report extensively on the diversity of their own boards across LGBTQ+, race, cultural background and First Nations.

"One of them, Block Inc (incorporating Afterpay), is jointly listed on NASDAQ and the ASX and therefore needs to also follow NASDAQ listing rules which have requirements relating to minority groups and reporting," he wrote.

"The other, Woodside Energy, voluntarily discloses these statistics as '… the board is strongly committed to inclusion and diversity and reporting board diversity across a range of lenses demonstrates this'.

"These companies show that such reporting can be done. But research by ALBEI has unearthed a resistance to collect this data at board level as it is 'personal' and 'sensitive'. This view is out-of-step with developments in the UK and the US where regulators are proposing collection and disclosure of board-level diversity."

Governance Institute of Australia chair Pauline Vamos said the report demonstrated boards were not reaching into broader pools of talent which is a worrying sign for the future.

“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,” Vamos said.

“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."

Watermark Search International managing partner David Evans said organisations should look to talent on boards outside of the ASX 300 such as government, not for profit and private company boards.

“The pool of talent you draw from can make or break public perception of your organisation, and its bottom line,” Evans said.

“Companies should also consider executives who have reported to a board because they can bring useful information about how organisations can serve their customers, employees and markets more effectively.”

The report also found a significant decline in the percentage of younger directors under 50, while chair tenures of 20 years and beyond are rising.

Vamos said the concentration effect was a still a concern, with the trend of longer chair tenures acting as a blockage to opportunities for new 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, 10 years’ time and start planning now for the type of board ‘personality’ required to get there.”