India will reach 30% gender diversity on company boards only by 2058

2024 'board refresh' could mark opportunity to accelerate change, says IiAS report

India companies will take more than three decades to reach 30 per cent gender diversity at their current pace of change.

The pace of women’s representation has been slowing with only a one per cent increase during the past three years, suggesting that it will reach 30 per cent only by 2058, according to a report from proxy advisory firm Institutional Investor Advisory Services (IiAS) with Netherlands-based APG Asset Management Asia. Representation was 17.6 per cent at the end of March 2022.

The study looked at numbers for the Nifty 500 companies. It showed six per cent representation in 2014. This increased to around 17 per cent in 2020 following rule changes (chart 1). The Companies Act 2013 required a minimum of one woman director on company boards. The Securities and Exchange Board of India (Sebi) made this a part of listing regulations in 2015. The requirement was tightened to having one independent woman director for the 500 largest companies from 2019 and the top 1,000 companies by 2020.  

The year 2024, which marks the end of the tenure of a number of directors, could be an opportunity to accelerate the shift; according to the report.

Independent directors were given two tenures of five years each effective from 2014. This has meant that many positions would now open up for new directors in 2024, said Amit Tandon, managing director, IiAS.

“The approaching 2024 board refresh marking the end of the grandfathering of independent directors’ previous tenure, provides a unique opportunity to reset the pace of change, by appointing 30 per cent women on boards. Corporate India must take the opportunity to refresh the board and build in stronger gender diversity.  For this, boards need to change their lens away from mere regulatory compliance, to think about women as a share of aggregate board size. The target must be, at the very least, 30 per cent,” he said.

The report noted that representation within important board committees also varied (chart 2). There was lower representation among the chairs of audit committees in 2022 than in previous years, noted the report.

“This may be viewed as a sign of reduced women-led decision making in matters of financial reporting and risk management. Companies need to course correct and address this sharp decline witnessed since 2017,” it said.

Public sector companies have lower diversity than most. The segment has 13.54 per cent representation compared to 18.16 per cent for family-owned companies and 20.56 per cent for multinational companies, said the report.

“Women representation brings in a different perspective, intuitiveness, and a more collaborative style of leadership into corporate boardrooms underscoring the need for companies to move beyond the regulatory dialogue on gender,” said Hetal Dalal, president and chief operating officer, IiAS.

“Diversity, as a theme, has several attributes including gender, social and ethnic background, education, nationality, work experience and age. The board should ideally take all these factors into account to achieve an optimal board composition.  But among these, gender diversity is often a good place to start because it is tangible, easily measured, and straightforward in terms of disclosure and compliance,” said Aaten Thijs, chief executive officer, APG Asset Management Asia.