Nifty 500 firms have 17% women directors as regulators pitch for gender diversity

New Delhi: Nifty 500 companies had 17 per cent women directors (777) out of the total number of directors (4,657) on March 30, 2020, as regulatory changes in India continue to drive the dialogue on gender diversity.

A recent regulatory change made it mandatory to have at least one independent director on board since April 1, 2019.

The Institutional Investor Advisory Services (IiAS) has released a study on "Corporate India: Women on boards." SBI Mutual Fund has partnered this study.

The data from the IiAS study shows that the effects of the regulatory push are clearly visible as Nifty 500 companies had 17 per cent women directors (777) as on March 30.

While MNCs have a higher female representation at 19 per cent, PSUs trail behind with 11 per cent female representation. Of the 777 directorships held by women on board, 71 per cent are independent directors (548).

Majority of the women being appointed in leadership roles have professional experience and expertise. A total of 43 per cent of the boards had two or more women directors (as on March 30, up from 21 per cent three years earlier).

The study also found that women are now getting a say on board composition and executive remuneration. In total, 4 per cent of the boards are chaired by women, while nomination and remuneration committees had the highest proportion of women at 18 per cent, up from 13 per cent on March 31, 2017.

Other committee memberships include: 16 per cent in CSR, 16 per cent in audit and 14 per cent in stakeholder engagement committee.

The healthcare sector has the maximum percentage of women directors at 21 per cent, while the energy sector has the lowest at 11 per cent. The average tenure of women on the board is 4.8 years while for men it is 8.7 years.

European countries, with women representation on boards between 30 per cent and 40 per cent, continue to lead the way. In the US, women hold 20.4 per cent of the board seats of R3000 companies. In the UK, the 30% Club achieved its stated target of a minimum of 30 per cent women on the FTSE-350 boards by 2020.

Initially investors and more recently investment bankers are driving the board diversity globally.

The study found that corporate India is absorbing the benefits of gender diversity. More companies now have one woman on their boards, and several boards have more than one.

Regulations, it appears, have rejuvenated the focus on gender diversity in boardrooms. However, although there has been a lot of progress, India continues to trail behind global standards on including women in boardrooms.

The study said that while at the board level, gender diversity is improving, one of the challenges that India and several other markets face is gender diversity at the leadership and middle management levels. This is a critical fix that corporate India needs to address. Only then gender diversity at the board level will become a natural outcome, rather than a focused fix.