Accelerate DE&I in the Boardrooms to create long-term value and sustainability

Gender diverse Boards drive greater profitability, increase accountability and bring in disruptive innovation.

In brief

• Representation of women on Boards has increased from 6% in 2013 to 18% in 2022.
• Almost 95% of NIFTY500 companies have at least one woman Board member, compared to 69% in 2017.
• Women in senior and managerial positions in India remain low at only 14.6%, highlighting the need to build the pipeline to Boards position.

Today, investors and stakeholders consider more women in leadership positions as an indicator of gender equality and Board effectiveness. Yet, it will take 132 years to close the gender gap worldwide, compared to 99.5 years estimated before the COVID-19 pandemic, according to the World Economic Forum’s Global Gender Gap report 2022¹.

The pandemic has amplified the pre-existing issues related to diversity, equity and inclusion, or DE&I. We must accelerate our efforts to promote DE&I in the boardroom, as gender diversity is a key ingredient of long-term value creation and sustainable business practices. The EY thought leadership report, “Diversity in the Boardroom: progress and the way forward,” addresses various concerns associated with gender diversity in the boardroom. It will help catalyze meaningful conversations to support Board diversity and act as a guidebook for India Inc. and the Government to reinvent their DE&I efforts through inter alia the Board diversity toolkit prescribed in the report.

India's Board diversity story

The Government of India (GoI) and regulatory bodies in the country have taken multiple initiatives to increase the number of women in the boardroom. The 2013-22 statistics highlight India’s substantial progress in the representation of women on Boards, which has increased from 6% in 2013 to 18% in 2022. However, post-2017, we witnessed a slower pace of women’s representation on Boards.

The share of women in senior and managerial positions in India remains low at only 14.6%, and only 8.9% of firms have women as top managers. For a significant shift to take place, companies must understand that a higher representation of women in leadership positions is required across different industries to truly accelerate the goal of Board diversity in India.  

Need to increase the number of women in executive positions across industries

The number of women in executive positions on Indian Boards has grown in 2022 — 7.2% compared to 6% in 2017 — though the pace is slower than the increase in number of women in non-executive positions on Indian Boards, which has gone from 16% in 2017 to 21.4% in 2022.

Indian companies score high in terms of regulatory compliance. Almost 95% of NIFTY500 companies have at least one woman Board member, compared to 69% in 2017. More than 40% of the companies surpassed the regulatory mandated limit and appointed more than one woman Board member. In some organizations, women form almost a third of the Board. However, data also show that less than 5% of companies have women as chairpersons, which presents an opportunity for improvement.

Exploring Board diversity across industries

Board diversity in India can be attributed to mandatory regulatory interventions and most industries can therefore be expected to have similar levels of women’s representation on Boards. But there is significant divergence in the level of gender diversity across industries and decisive steps are needed to help women leaders attain executive positions across industries.

How diversity makes sense for business, innovation and corporate governance

With 50% of users of all services and consumable products being women, DE&I is the answer to counter limited or linear views of opportunities for corporates. However, the benefits of diversity are more far-reaching and deeper, especially in governance and innovation.

It has been proved that organizations with gender diverse boards perform better and deliver higher dividends to shareholders. They demonstrate superior adaptability to changes in the environment and marketplace with more innovations while challenging conventional norms.

Organizations with diverse Boards experience enhance transparency and accountability, especially in mitigating fraud. Informed women Board members are also capable of  lowering the inconsistencies in CEO payments and the probability of a financial anomaly. Women directors reduce the risk of impression management policies in sustainability reporting.

Board representation by women is positively associated with both R&D expenditures and innovation output, according to a research paper, Female Board Representation, Corporate Innovation and Firm Performance. Boards with women directors remain associated with more patents and citations. Specifically, an increase of 10 percentage points in the tenure-weighted fraction of women directors is associated with approximately 6% more patents and 7% more citations.