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When The Hard Cold Facts Back Up Instinctive Knowledge

This article is more than 8 years old.

A tendency to focus overly on both the "known and the unknown unknowns" may, in truth, be simply a way of dodging an issue.

So it has been with women on boards, and perhaps so it is today when it comes to the need to prioritize renewable energy. Waiting for the evidence to land on the table denies a very powerful source of knowledge through history: human instinct.

Until recently there were too few significantly sized companies with women on the board and readily available financial performance information to be useful for the purposes of assessment. But now there are: all but 16 of the S&P 500 have a woman on their board, 330 of the FTSE 350 do, and in the Indian CNX 200, 176 companies have a female board member. Research from professional services firm Grant Thornton suggests that, "based on return on assets, companies with diverse executive teams outperform by a significant margin in the three markets explored."

It puts profit foregone - or "opportunity cost" by the companies with male-only boards at $655 billion across the three economies.

Source: Grant Thornton September 29, 2015

In the U.K. and the U.S. the impact of moving to mixed gender boards on the S&P 500 and FTSE 350 could boost GDP by around 3%, says its report Women in business: the value of diversity.

Francesca Lagerberg, global leader tax services and Europe for Grant Thornton, adds: "Impressive as these are, however, these numbers are based just on large listed companies. Further, unquantifiable, potential lies beyond in non-listed companies and mid-sized companies."

Source: Grant Thornton September 29, 2015

It is Grant Thornton (not me) making the link between renewable energy and board diversity - "two very different but topical issues with shared challenges", as it puts it. But I think it is onto something. Perhaps we have moved too far away from instinct, which relies on empathy to push us along the path of the 'right' decision.

Despite endless reports and seminars and conferences  and roundtables and media headlines on board diversity and gender, intelligent individuals all over the world have been struggling now for too long to get across a very basic message on the value of diversity.

I have covered the subject here  repeatedly, including a recent book by Aaron Dhir, an associate professor at Osgoode Hall Law School, part of Ontario's York University, on the use of the law to achieve boardroom diversity.

Today the Ontario Securities Commission, (OSC) responsible for regulating the securities markets in Ontario, Canada's largest province by population, held a roundtable to discuss progress on the representation of women on boards and in senior executive positions. It has been outspoken in rebuking firms on their lack of gender diversity, and Mr Dhir was one of those in attendance.

In June this year, speaking about the bare "technical compliance" firms had shown on newly introduced gender diversity disclosure rules, OSC Chair Howard Wetson said in remarks at the annual meeting of the Canadian Coalition for Good Governance (CCGG) in Toronto: “It’s simply not good enough. This type of disclosure leads us to believe that the boards of these companies are not taking the issue as seriously as we had intended.”

At today's event "the regulator's review found that 65% of issuers did not adopt a written diversity policy and very few issuers adopted targets. But I think there was a consensus around the table that the rule is still in its infancy and that issuers need some time to adjust to the requirements. I think the rule is causing firms to develop a vocabulary of diversity" Mr Dhir tells me.

As for Grant Thornton, it is now headed by Sacha Romanovitch, the first woman to head a major City accountancy firm. As this interview with her in London's Evening Standard makes clear, she has a passion to drive change. Do read it, to see how much of a mark one woman can make. Harnessing that sort of energy is what takes us forward, just as instinct can provide an important clue as to direction.