The business case for boardroom diversity: Diverse boards outperform male-only peers by £430bn

Clara Guibourg
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"We know it’s the right thing to do - both in terms of fairness and for sustainable future growth" (Source: Getty)

Boardroom diversity boosts business, as diverse boards are outperforming their all-male peers by billions.

Listed companies in the UK, US and India with at least one woman on their board beat male-only boards by $430bn in 2014, according to a report from Grant Thornton which measured the difference in returns on assets.

Although this isn’t the first study arguing a business case from diversity - a McKinsey report published earlier this year found that the most gender-diverse companies are 15 per cent more likely to outperform the least diverse - it does put an exact value on diversity for business.

For companies on the UK’s FTSE 350 index, all-male boards performed 0.53 per cent worse than companies with at least one woman in the boardroom. In absolute numbers, this translates to £48.5bn lost every year.

Read more: Mentoring critical to having more women on boards

Francesca Lagerberg, Grant Thornton’s global leader for tax services, compared the way companies approach diversity to the debate surrounding renewables:

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.

But the message from our research is clear: there is a large opportunity cost for companies associated with male-only executive boards. Those businesses stuck in the past are not fully unlocking their growth potential.

UK boardrooms have changed dramatically in recent years, with the number of female executives doubling in just the past four years, and women making up four in ten new appointees to FTSE 350 boards.

Britain’s blue-chip companies recently hit the target set by Lord Davies of having one-quarter female executives, and after Glencore appointed Patrice Merrin last year, there are no longer any male-only boards among FTSE 100 companies.

The same, however, is not yet true of the UK’s smaller listed companies, which have further to in terms of gender balance.

Something to remedy, perhaps, to boost results?

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