- As of October 2022, less than one-third of companies domiciled in the developed markets of Europe and the Americas met the 40% women on boards threshold.
- France, Italy and Austria had the highest proportion of companies reaching this threshold while, by sector, communication services (43.7%) led the way and materials (19.3%) lagged.
- Companies that have reached 30% of female directorships, but are yet to hit 40%, could see more frequent shareholder interaction as calls for the 40% threshold gain momentum.
MSCI has been tracking and reporting on the gender diversity of corporate boards since 2009. In Women on Boards Progress Report 2022, we found that 38.0% of constituents of the MSCI ACWI Index had at least 30% of board seats1 held by women,2 a milestone that many investors, regulators and other stakeholders have long advocated for. However, the 30% board gender diversity target may soon become less prominent in some developed markets.
A 30% threshold — yesterday’s news
Eight out of 18 countries of domicile in developed markets in Europe and the Americas3 have already set mandatory or voluntary 40% board gender diversity quotas (see exhibit below). In 2022, the European Union adopted a new target of 40% of non-executive director seats on corporate boards to be held by the under-represented gender by June 2026.4 Prominent institutional investors have also been at the forefront of pushing for greater board gender diversity.5 For example, in January 2023, the Ontario Teachers' Pension Plan Board disclosed new guidelines that advocate for large-cap companies to increase women’s representation on boards to 40%.6 As the expectations for board gender diversity evolve, we assessed whether companies domiciled in the developed markets of Europe and the Americas are ready for the new frontier.7
40% board gender diversity quotas for public companies in select domiciles
Note: The chart includes eight countries of domicile in developed markets in Europe and the Americas that have already set mandatory or voluntary 40% board gender diversity quotas. Market classification is based on the MSCI Global Investable Market Indexes Methodology. Analysis as of October 2022.
Domicile-level analysis: Impact of gender diversity quotas
Most MSCI ACWI Index constituents (70.8%) domiciled in developed markets in Europe and the Americas had at least 30% women on boards.8 But less than one-third (30.0%) had 40% or more women directors. In Europe, the biggest gaps occurred in Belgium and Portugal. While all 12 Belgian index constituents reached or surpassed the 30% benchmark, two-thirds of them were below the 40% threshold. For the Americas, Canada ranked in the top 15 among global peers by total directorships held by women, but only 33.7% of the companies had met the 40% target. In the U.S., this figure was even lower (16.4%).
Of the eight countries in our analysis where at least half of the companies had met the 40% women on boards threshold, four have adopted mandatory 40% gender diversity quotas and two have adopted voluntary quotas.
30% to 40% women on boards (WOB) gap by domicile
The chart comprises constituents of the MSCI ACWI Index in 18 countries of domicile in developed markets in Europe and the Americas as of October 2022. Market classification is based on the MSCI Global Investable Market Indexes Methodology. Boards of directors (one-tier board structure) and supervisory boards (two-tier board structure) were considered in this assessment.
Sector and industry-level analysis: The leap to 40%
Among all sectors9 represented in our 18 countries of domicile, materials had the biggest gap between percentages of companies that met the 30% and 40% women on boards thresholds (69.3% and 19.3%, respectively). Within materials, the containers and packaging industry had the lowest percentage of companies (9.1%) that met the 40% target. Conversely, communication services had the highest percentage of companies that had reached the threshold of 40% (43.7%). Within this sector, the diversified telecommunication services industry had the highest percentage of companies with at least 40% women directors (52.4%).
30% to 40% women on boards (WOB) gap by sector
The chart comprises constituents of the MSCI ACWI Index in 18 countries of domicile in developed markets in Europe and the Americas organized by GICS sector as of October 2022. Market classification is based on the MSCI Global Investable Market Indexes Methodology. Boards of directors (one-tier board structure) and supervisory boards (two-tier board structure) were considered in this assessment.
Evolving expectations
Changing market expectations for the level of women on boards could put pressure on more companies to boost board gender diversity. Companies with more than 30% but less than 40% women on boards may face more frequent interactions with investors and other stakeholders as the 40% threshold becomes more prominent.
1Boards of directors (in a one-tier board structure) and supervisory boards (in a two-tier board structure) were considered in this assessment.
2As of October 2022.
3Our analysis covers constituents of the MSCI ACWI Index in 18 countries of domicile in developed markets in Europe and the Americas, as of October 2022. These countries are: Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, U.K. and the U.S. Market classification is based on the MSCI Global Investable Market Indexes Methodology.
4“Gender Equality: The EU is breaking the glass ceiling thanks to new gender balance targets on company boards.” European Commission press release, Nov. 22, 2022.
5Gormley, Todd, et al. “The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice.” Harvard Law School Forum on Corporate Governance, December 2020.
6“Ontario Teachers' raises threshold for women on boards to 40%.” Financial Post, Jan. 19, 2023.
7As most companies in the developed markets of the Middle East and Pacific and emerging markets still haven’t reached the 30% women on boards threshold, we only focused on domiciles in developed markets in Europe and the Americas in our analysis.
8Our analysis covers constituents of the MSCI ACWI Index in 18 countries of domicile in developed markets in Europe and the Americas as of October 2022. Market classification is based on the MSCI Global Investable Market Indexes Methodology.
9Sectors and industries are based on the Global Industry Classification Standard (GICS®), the global industry classification standard jointly developed by MSCI and S&P Global Market Intelligence.
Further Reading
Women on Boards 2022 Progress Report