Board diversity may be a COVID casualty

Boards must refrain from using the coronavirus crisis as an excuse to revert to old habits when it comes appointing directors.

Noting that the proportion of women on ASX 200 boards had not increased between January and April, the Australian Institute of Company Directors said it had "serious" concerns that boards may put less emphasis on diversity when they appoint directors.

There was a danger that in times of business turmoil chairmen would return to past habits and appoint acquaintances and people they knew to the board, with little regard to gender balance, said AICD chief Angus Armour.

"They might take the easy path and go to people who are well known to them, the usual suspects," Mr Armour said, although he stressed he had seen no evidence of this so far.

Even in times of turmoil, Mr Armour argued, the principle remained the same. "Diversity allows for better decision making," he said.

The AICD will on Tuesday reveal that the proportion of women on the boards of ASX 200 companies was 30.7 per cent in April, unchanged since January, but up from 29.6 per cent in April last year and 23.6 per cent in April 2016.

"I am very happy with the increase from last year. It is a good outcome in the current environment," Mr Armour said.

He argued that the lack of progress in early 2020 likely reflected fewer board appointments in recent months as companies dealt with the impact of the coronavirus pandemic.

So far this year, female directors represent only 34 per cent of new appointments to the ASX 200.

The number of companies with female chairmen rose to 18, up from 13 a year ago and just eight in 2016.

The number of female directors on ASX 100 boards was steady in April at 31.8 per cent, suggesting it was companies at the smaller end of the ASX 200 that made the most progress.

Vicky Binns, a director of Cooper Energy, argued that patience was required when it came to improving gender diversity, given that most directors served between six and nine-year terms so it took time to turn over board seats.

"It's not a quick fix," Ms Binns said. She disagreed that boards would stick with what and who they knew as a result of the crisis and make more conservative board appointments.

"The horse has bolted," she said, adding that shareholders increasingly expected boards to be balanced, both in terms of gender and ethnicity – and in some cases of age.

"COVID-19 has meant a delay in the appointment of new directors. I have faith that it doesn't mean [chairmen] will be appointing people who look like them," Ms Binns said.

Four companies, New Hope, Pro Medicus, TPG Telecom and Silver Lake Resources, had no female directors as of April.

"The announcement of those four companies will probably not be taken very well by their shareholders," Ms Binns said.

A study released last week showed that female directors had superior qualifications.

Recruitment firm Watermark Search International and the Governance Institute of Australia found that 7 per cent of female directors had PhDs, against 4 per cent of men. Forty per cent had either an MBA or a masters degree, against 33 per cent of men, and 89 per cent of women directors had an undergraduate degree, compared with 73 per cent of their male counterparts.

Female directors were also far more likely to have formal governance training.

That study also found that the proportion of directors from non-Anglo-Celtic cultural backgrounds fell to 5 per cent from 5.4 per cent between 2016 and 2020.

The proportion of board directors from anywhere outside Australia declined to 29.3 per cent from 30.4 per cent over the same period.

The AICD said 96 companies in the ASX 200 had reached the target of having at least 30 per cent female directors, while that target had been reached by 14 of the biggest 20 companies.