corporate strategy and governance – but while half of the South African population and 45% of the employed workforce are female, only 20% of directors of JSE-listed companies are women.

Corporate boards are failing to take advantage of the value of female business leaders’ diverse perspectives and networks, despite a “vast, untapped pool of qualified and capable women”, says the newly-released report Women on South African boards: facts, fiction and forward thinking by the University of Stellenbosch Business School (USB).

“According to the [Business Women’s Association of South Africa] BWASA Women in Leadership Census, from 2012 to 2017, only 26 JSE-listed companies consistently had a 25%+ female board, while approximately 45 of the 277 companies had no female directors at all”, the report’s lead author Prof Anita Bosch, the USB Research Chair for Women at Work, said.

Corporate boards are failing to take advantage of the value of female business leaders’ diverse perspectives and networks, despite a ‘vast, untapped pool of qualified and capable women’.

“The pool of talented women suitable for board directorships is steadily increasing and gains have been made, but they are too erratic and too small to correct the gender imbalance,” she said.

The report recommends a voluntary target of 30% female board members as “reasonable and feasible”, with 40% as a stretch target.

South Africa has no legislation specifically requiring companies to include women on their boards of directors, and indirect measures – such as the Johannesburg Stock Exchange (JSE) listing requirements – are limited in scope, relevance, impact and enforceability, the report found.

“For instance, there have been no consequences for JSE-listed companies that have not complied with listing requirements related to the advancement of gender diversity at board level,” she said.

There have been no consequences for JSE-listed companies that have not complied with listing requirements related to the advancement of gender diversity at board level.

Contrary to popular belief, Prof Bosch said, there are more than enough talented women to serve on boards – “directors just need to look outside their normal, comfortable networks to find them”.

The report’s publication, sponsored by WDB Investment Holdings (WDBIH) – the women-owned and -operated group focused on advancing the meaningful participation of women in the economy – explores what is needed to strengthen women’s representation on boards and “what it takes for women directors to gain the power, influence and critical mass to be able to effect change”.

Contrary to popular belief, Prof Bosch said, there are more than enough talented women to serve on boards.

Voluntary targets, improved monitoring and reporting, enforcement and consequences for non-compliance, establishing shadow boards to grow the next generation of female directors, and lobbying, are among the recommendations of the report.

“In SA we can only do voluntary targets since quotas are regarded as unconstitutional. Voluntary targets, however, can be just as effective as quota systems. The trick lies in the enforcement of voluntary targets and penalties, even if only through social pressure, which could be associated with non-compliance to own targets.”

The lack of women in senior management is evident from BWASA statistics:  from the almost 600 female board members of JSE-listed companies in 2017, over 80% were non-executive directors.

Addressing the gender imbalance in the top tier of business leadership in South Africa will take strategic and concerted efforts by companies, directors, shareholder activists and institutional investors, she said.

The lack of women in senior management is evident from BWASA statistics: from the almost 600 female board members of JSE-listed companies in 2017, over 80% were non-executive directors.

“Indirect measures to encourage gender diversity on boards” include the Broad-Based Black Economic Empowerment (B-BBEE) Act and codes of good practice, the Employment Equity Act, the King IV Report on Corporate Governance (application of these codes is voluntary except for JSE listed companies), and stock exchange listing requirements.

Co-author, Prof Kathleen van der Linde said, “these are all limited in scope, relevance, impact and enforceability”. And meanwhile, the 2013 Women Empowerment and Gender Equality Bill, which provided for equal representation of women on the boards of public and designated private bodies, was withdrawn for further consultation in 2014 and “appears to have since been abandoned”.

The recommendations in brief

For companies

Prof Bosch said companies could play an active role in “effecting change from within” by identifying, training and promoting high-potential female employees and candidates to board positions – for example by:

• Closing the gender wage gap between male and female, signalling to women that they are valued equally for their contribution.
• Prioritising the search for female candidates for senior management and board positions. It all starts with the existing board members.
• Looking outside of traditional networks and exploring avenues such as academia, professional bodies, government and non-profit organisations for new, female talent.
• In the medium-term, sponsoring emerging talent in women senior managers to prepare them for future board  positions.
• Developing a “shadow board” where prospective future directors can shadow and learn about board protocol from existing board members.

Prof Bosch said companies could play an active role in ‘effecting change from within’ by identifying, training and promoting high-potential female employees and candidates to board positions.

For existing board members

The report recommends that current board members play a part in developing the next generation of women board members by:

• Supporting initiatives such as shadow boards; and vouching for women in senior management to open up opportunities and prepare them for future board roles.
• Using directorships in non-profits, unlisted companies and larger private companies to grow the pool of experienced women from which listed companies can make board appointments.
• Supporting female executive directors to take on independent and non-executive directorships to gain experience.
• Implementing family and other support mechanisms to enhance the opportunity for women in their child-bearing and -rearing years to serve on boards.
• Engaging in questions of what the board is doing and what more could be done; and supporting research on board gender diversity in order to stimulate debate and critical conversation.

For shareholder activists

“Shareholder activists have the power to encourage change through applying pressure to regulatory and industry bodies, and within companies themselves,” Prof Bosch said.

She said recommended actions included:

• Lobbying for more accurate reporting, such as the movement for the Companies and Intellectual Property Commission (CIPC) to report on board gender diversity and for licenced exchanges to enforce listing requirements on gender, age and race reporting.
• Nominating strong women directors to the boards of companies they hold shares in, especially where a woman director is performing well on one company board and could add value to another company in which they hold shares.
• Using their public voice, such as in the media, to stimulate public debate on board diversity.

‘Shareholder activists have the power to encourage change through applying pressure to regulatory and industry bodies, and within companies themselves,’ Prof Bosch said.

For institutional investors

Large institutional investors have a duty to look after the long-term value of investments made on behalf of their investors, and economic, social and governance considerations are interlinked with the long-term sustainability of a company. These institutions can use their voting and lobbying power to shape company strategy and influence the composition of boards, Prof Bosch said, by:

• Encouraging the appointment of at least one additional woman to the boards of companies they invest in.
• Giving preference to investing in companies that are making progress towards gender-balanced boards.
• Making their votes count with a coordinated voting policy that prioritises gender diversity when voting on new board members.

On targets, monitoring and reporting

Since one in three listed companies already have at least 25% women directors according to the BWASA Women in Leadership Census, the report recommends a voluntary target of 30% for listed companies as “reasonable and feasible”, with 40% as a stretch target.

And, she said, since most board decisions are actually taken at committee level, listed companies should set specific targets for women directors’ representation on board committees and as committee chairs. They should also be required to show gender parity in nominations for board members and to document the reasons for selections to the short-list stage.

In terms of reporting, the report recommends that the Institute of Directors-South Africa (IoDSA) facilitate the enhancement of recommended practices in King IV by setting a voluntary target for gender diversity at board level, thus ensuring JSE-listed companies must report on their progress.

Prof Bosch said various government departments and agencies, as well as the IoDSA and listed exchanges, could play a role in monitoring progress and enforcing compliance.

The regular reporting mechanisms of organisations such as the Business Women’s Association of South Africa (BWASA) and the Institute of Direstors South Africa (IoDSA) should be used to keep board diversity on the national agenda.

The regular reporting mechanisms of organisations such as the Business Women’s Association of South Africa (BWASA, whose 2017 Women in Leadership Census provided much of the data for the USB report) and the IoDSA should be used to keep board diversity on the national agenda. Reporting information from the JSE and other stock exchanges could be used to produce lists of companies meeting, exceeding or not achieving gender targets, and to develop a national progress-monitoring index.

About the report

Women on South African boards: facts, fiction and forward thinking is a publication of the Research Chair: Women at Work, at the University of Stellenbosch Business School, the publication of which was sponsored by WDB Investment Holdings (WDBIH) and published in March 2020 on the USB Management Review platform.

Editor

Prof Anita Bosch, USB Research Chair: Women at Work

Co-author

Prof Kathleen van der Linde, Professor of Mercantile Law, University of Johannesburg

Co-author

Shimon Barit, USB Research Fellow

Get the report:

Full report

Section 1 | Facts and fiction

Section 2| True stories: lessons from the rest of the world

Section 3 | The limits of the law: the South African legal framework 

Section 4 | Forward thinking: getting more women on boards

Section 5 | Moving forward: turning theory into action