The " Women Count 2020 report" by gender diversity business The Pipeline confirms a significant correlation between a diverse gender leadership and companies' financial success. The report shows that UK-listed companies that have no women on their executive committees have a net profit margin of 1.5%, while companies where at least one in three board members is female have a net profit margin of 15.2%. Only 14 of the FTSE 350 companies are led by women, while 15% of have no female executives at all.
The sectors where the lowest number of women in executive roles can be found are construction and retail, even though 80% of entry level jobs in retail are held by women. According to former Prime Minister Theresa May, who contributed to the report, there can be "no good explanation for the massive underrepresentation of women at the top of British business."
While considerable progress has been made in empowering women in the workplace, with several countries implementing regulations to support them, women still remain on unequal footing with men, particularly at the most senior levels of organizations.
The good news is that momentum is building to address this disparity. Research from social psychology highlights how diversity can improve group decision-making processes. Studies show that diverse groups make better decisions than homogeneous groups and solve tasks in a superior way. The latter succumb more readily to "groupthink," a desire for conformity and harmony that overrides rational decision-making.
The positive effects of diversity on corporate board operations (such as increased monitoring and wider skill sets) can increase profitability through loss prevention and better strategic decision-making. A number of recent studies have demonstrated that companies with more gender-diverse boards and senior management perform better on accounting-based metrics.
Investors with an interest in gender equality can incorporate elements of sustainable investing in their portfolios. These held up well during the drawdown and interest in SI should continue to grow as the focus following the COVID-19 pandemic switches to the green recovery and ESG-related topic.
Main contributor: UBS Editorial
For more on this topic, read the latest UBS Own Your Worth report Women, Wealth and the Path to Financial Independence, 2020, and the white paper Gender-Lens Wealth, 6 March 2017.
Read also Managing the next decade of women's wealth, April 2020, the Boston Consulting Group's report on women's wealth that includes insights from UBS thought leaders.