Diversity on executive boards: Better for business

 
Caitlin Morrison
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Firms with at least one female executive board member outperformed those with male-only boards (Source: Getty)
Diversity on executive boards can help companies to outperform firms with all-male leaderships, according to new research from Grant Thornton.

A study by the group estimates that the opportunity cost, in terms of lower returns on assets, for companies with male-only boards was £430bn in 2014.

The report, Women in business: the value of diversity, scrutinises the financial performance of companies listed on the FTSE 350, CNX 500 and S&P 500.

Analysis of the return on assets ratio showed that, on average, firms with at least one female executive board member outperformed those with male-only boards in each of those three markets.

Francesca Lagerberg at Grant Thornton likened the debate around board diversity to that of renewable energy: “We know it’s the right thing to do – both in terms of fairness and for sustainable future growth – but collectively society is dragging its heels.”

She added: “The message from our research is clear: there is a large opportunity cost for companies associated with male-only executive boards. Like a world still addicted to fossil fuels, these companies are suffering now. A lack of action now will make it all the more difficult to respond in the future when both problems are likely to be more acute.”