In focus: Improving returns by improving equality

The report “ Improving returns by improving equality” argues that companies with greater diversity in their executive teams tend to have higher profit and longer-term value.  With this report we hope to highlight that diversity is crucial for a company’s profitability, understand why the pace towards diverse teams are so slow and share positive examples of when things are moving in the right direction.

Read the report here>

Highlights from the report:

  • Companies with the greatest proportion of women on executive committees earned a 47% higher rate of return on equity than companies with no women executive.
  • We find that the share of women on the board of directors and in senior leadership is increasing, but from in some cases appallingly low levels just a few years ago. We believe the positive trend will continue, but at a slow pace. The ‘broken rung’, the phenomenon whereby women are unable to break through entry-level management roles and get promoted to higher levels, often caused by bias, needs to be fixed to improve the workforce’s ability to compete on equal terms
  • Research indicates that companies with greater gender diversity, particularly those in the top 25%, are statistically more likely to outperform their counterparts in terms of profitability. Therefore, rectifying the broken rung issue not only fosters a more inclusive work environment, but also contributes positively to the bottom line of businesses.
  • We found that companies with a high gender balance on their board tend to achieve a better return on equity, and inclusive teams make better business decisions up to 87% of the time, according to Forbes.
  • As board members are recruited from the C-suite positions, the share of women in senior executive positions need to increase significantly to expand the candidate pool for the board.
  • The share of women among senior executives certainly confirms that it is harder for women to advance within a company. The trend of women gaining senior executive roles has clearly increased from 2015 to 2022, but from appallingly low levels just eight years ago.
  • Other gender discrimination issues are foreign-born women being underrepresented in paid work; occupational sex segregation is falling but is still high; and many women still find it too hard to progress to managerial positions.
  • The World Bank Group finds that if women had the same lifetime earnings as men, global wealth would increase by USD23,620 per person, on average, in the 141 countries studied, for a total of USD160trn
  •  The main shock that sets the gender pay gap comes at the time of the birth of a child. At that point, women’s earnings fall and do not recover until the child is nine or 10 years old. However, it is possible to change the gap: Parental leave for men in Iceland soared from 3% in 2000 to 45% today through the introduction of non-transferable paid leave

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