This International Women's Day, we're taking a moment to reflect on the progress, or in some cases the lack of progress, made in female representation within senior management across the globe. The findings reveal a story of slow progress - with an annual increase of less than 1% at the current pace. Furthermore, we examine the potential for gender equality to not only shape corporate culture but also influence investment returns, spotlighting its relevance in financial decision-making.
Upon an analysis of every listed company globally, we looked into the evolution of gender diversity within senior management from 2014 to 2023. The overall trend is positive, albeit slow, with an average percentage increase of approximately 7.8% - less than 1% increase per year. However, this change is not uniform across all countries, highlighting significant regional disparities and differing rates of progress.
Hover and interact with the map to explore:
Portugal and Australia lead the charge
Portugal and Australia emerge as frontrunners, showcasing the most substantial increases in the percentage of women in senior management roles:
Portugal leads, with a 16.4% increase, moving from 10% to 26.4%. This underscores the effectiveness of policies, especially its pioneering Law 62/2017, which mandates minimum % of gender equality for publicly listed companies.
Australia has seen a remarkable 14.1% increase, from 9.4% to 23.4%. Women's representation in political leadership has significantly influenced Australia's gender equity. The climb in Australia's rank in the World Economic Forum's Global Gender Gap Report from 50th in 2021 to 26th underscores the impact of political action to empower women.
These countries exemplify the potential for dramatic improvements in gender diversity within a relatively short period, driven by targeted initiatives and broader societal changes.
A Comparison
To compile these results, we took the '% of women in senior management' data points (both disclosed and estimated using peer groups) and found the median for each country. Countries with less than 20% data coverage were excluded (usually through lack of disclosure or not enough similar peers to accurately estimate the data).
The Case Against Japan in Gender Diverse Portfolios
When investors aim to increase gender diversity within their portfolios, a common strategy often involves underweighting Japan. This approach is grounded in Japan's consistent underperformance in gender diversity metrics, particularly in senior management roles.
Our data corroborates this trend, showing minimal progress with a measly 5.6% increase. This stagnation makes a compelling case for investors focused on gender diversity to remain cautious about Japanese equities. Japan's slow pace of progress in gender equality in the workplace suggests that companies within this market may not be fully capitalising on the benefits of a diverse leadership team, potentially impacting their innovation, corporate governance, and ultimately, their financial performance.
Gender Diversity Progress in the UK and Global Surprises
Turning our focus to the UK, the progress has been disappointingly slow too. Despite various initiatives and public commitments to gender equality, the pace of change remains sluggish compared to some of the more surprising nations that have outpaced the UK in this domain.
From our list of 58 countries, the UK ranked 23rd in terms of gender diversity growth. Countries such as Botswana, the Czechia, and Indonesia have shown remarkable strides. These nations, often perceived as having more traditional gender roles, have embraced policies and corporate practices that substantially benefit gender diversity.
For full country rankings, please expand the below:
Country rankings - % Change
Rank | Country | % Change |
1 | Portugal | 16.4 |
2 | Australia | 14.1 |
3 | New Zealand | 12.9 |
4 | Italy | 12.8 |
5 | Austria | 11.6 |
6 | USA | 11.5 |
7 | Czechia | 11.3 |
8 | Singapore | 11.0 |
9 | Ireland | 11.0 |
10 | Botswana | 10.7 |
11 | Belgium | 10.6 |
12 | Sweden | 10.6 |
13 | France | 10.5 |
14 | Netherlands | 10.2 |
15 | Philippines | 10.0 |
16 | Nigeria | 10.0 |
17 | Indonesia | 10.0 |
18 | South Africa | 9.9 |
19 | Israel | 9.7 |
20 | Tunisia | 9.7 |
21 | Estonia | 9.3 |
22 | Turkey | 9.0 |
23 | UK | 8.5 |
24 | Malaysia | 8.4 |
25 | Canada | 8.4 |
26 | Mexico | 8.3 |
27 | Bahrain | 8.0 |
28 | Denmark | 7.4 |
29 | Romania | 7.3 |
30 | Pakistan | 7.2 |
31 | Morocco | 7.1 |
32 | Finland | 7.0 |
33 | Norway | 6.8 |
34 | Colombia | 6.7 |
35 | Hong Kong | 6.7 |
36 | United Arab Emirates | 6.7 |
37 | Thailand | 6.4 |
38 | Venezuela | 6.2 |
39 | Germany | 6.2 |
40 | Kuwait | 5.9 |
41 | Brazil | 5.6 |
42 | Switzerland | 5.6 |
43 | Japan | 5.6 |
44 | Slovenia | 5.2 |
45 | Greece | 5.1 |
46 | Chile | 5.0 |
47 | Argentina | 4.9 |
48 | China | 4.9 |
49 | Lebanon | 4.9 |
50 | Iceland | 4.7 |
51 | Taiwan | 4.4 |
52 | Saudi Arabia | 4.3 |
53 | Bulgaria | 4.2 |
54 | Russia | 4.2 |
55 | Qatar | 4.2 |
56 | Egypt | 3.7 |
57 | Hungary | 1.6 |
58 | South Korea | 1.2 |
Country rankings - % Women in management 2023
What About Returns? Implications for Investors
Companies with better gender diversity in leadership roles seem to deliver stronger investment returns. This is based on our study comparing the absolute returns of the top and bottom quintile companies for gender diversity from the ACWI over a period from 2014 to 2023.
The data shows that companies with a higher representation of women in senior management positions (the green line) have consistently outperformed those with lower representation (the blue line).
In our backtest, more gender diversity displayed c.56% increase in absolute returns*
It’s important to remember that investment returns are influenced by a wide range of factors. Market conditions, sector performance, and economic indicators all play a part. While our findings point towards a positive relationship between gender diversity and returns, they represent just one angle of investment analysis. However, this trend encourages investors to consider gender diversity as a factor when evaluating companies and making key investment decisions.
Gender equality and gender pay gap are just two of 300+ ESG factors that investors can optimise using SmartESG - adding impact without adding expected risk or reducing expected returns.
Are Women Better Investors?
Our group head, Euroclear, shed light on this topic with some striking figures from Sweden. Last year, Swedish women saw their domestic stock portfolios outperform men’s by a considerable margin. Women achieved an average return of 15.1%, while men saw returns of 10.3%.
This recent shift in performance is noteworthy, considering that men have traditionally led since Euroclear began tracking in 2016. This change is partially attributed to the fact that women have tended to invest in more established firms, while men have shown a preference for younger, tech-centric companies.
Research also shows that men are overconfident, and change their investments more often than women - hurting their financial performance.
Reflections and the Path Forward
The journey to equality is far from over. The variations across countries suggest that different strategies may be needed depending on the specific cultural, economic, and legal contexts.
As we observe International Women's Day, let us commit to leveraging these insights to foster environments where gender diversity is not just celebrated but actively pursued. The data presents a clear call to action: to build upon the progress made and address the gaps that persist. By doing so, we can pave the way for a more inclusive, equitable, and sustainable future in the corporate world and beyond.
*Past performance is not indicative of future performance. Our usual disclaimers apply.