As companies face new challenges in a world that’s changing at a dizzying pace, having the right mix of skills, experience and perspectives at the top could make the difference between getting ahead and falling behind. In the race for talent, companies able to tap the full pool to staff their boards and executive suites and develop a diverse pipeline of future leaders may have an edge.[1] In our analysis of diversity across boards, c-suites and executive teams, “diverse leadership” has begun to emerge.
Benefits of sustained gender diversity
MSCI has long tracked the progress of female representation in the boardroom. As of October 2023, women held more than a quarter of all board seats among large- and mid-cap companies in developed and emerging markets (constituents of the MSCI ACWI Index). But these directorships were not evenly distributed among companies. Although 41.2% of these firms had at least 30% women directors, others had few or none. And only about a third of the “30% club” of companies had managed to sustain that critical mass for at least three consecutive years as of February 2024.[2]
Companies with sustained gender diversity at the board level also stood out for other reasons. They were more than twice as likely to have a female board chair or chief executive officer (CEO) than other firms, and slightly more likely to have a female chief financial officer (CFO). This pattern held true across both developed and emerging markets. While only 4.1% of the constituents of the MSCI Emerging Markets Index had sustained board gender diversity as of February 2024, the correlation between board and executive diversity was more pronounced for this universe.
Data concerning the makeup of companies’ executive management teams is not as widely available as board data. Still, looking at the information disclosed by the constituents of the MSCI ACWI Index, companies with sustained board gender diversity were again about twice as likely to report at least 30% female executive managers.
Female representation across different seniority levels
Racial and ethnic insights
We also looked at the percentage of racial and ethnic minority directors. As this data is less widely reported than gender diversity, especially outside the U.S., we limited this analysis to U.S.-based companies and can therefore not draw any global conclusions.[3] While a significant percentage of companies even within the U.S. did not disclose the racial and ethnic makeup of their boards, among companies that reported data, those with sustained board gender diversity were also slightly more likely to have greater racial or ethnic diversity at the board level.
Racial and ethnic minority representation at board level among U.S.-based companies
Impact on talent pipeline
Although the data does not tell us whether there is any causal relationship underpinning these correlations, the group of companies that were able to reach and retain a critical mass of female directors had more diversity of representation across different seniority levels, which may indicate that companies’ ability to retain female talent at the board level can have a positive impact on their pipeline of diverse leaders.