As we kick off a new year, it is encouraging to see that we are entering 2019 with a historically high commitment to gender equality from both businesses and investors. Cultural shifts and better performance from more inclusive companies have accelerated the drive for greater equality throughout organizations, from the boardroom to entry-level positions. However, greater equality isn’t achieved by accident. It results from continued dedication and deliberate initiatives. Reflecting on last week’s World Economic Forum in Davos and the informative discussion that took place on the importance of inclusion in today’s enterprise, I thought it would be worthwhile to take a closer look at the key trends that are driving the evolution of equality.
I believe there are five factors that will accelerate this evolution: leadership and commitment from the world’s senior-most executives, investor interest in gender-related and other ESG data, superior performance of more inclusive firms, the shift in capital control towards women and, finally, increasing competition in the recruitment, retention and productivity of human capital.
First and foremost, achieving workplace equality requires commitment and action from the top. Executives and boards need to catalyze change throughout an organization in order for it to last. This starts with representation among directors, which is the foundational goal of the 30% Club, an organization I am fortunate enough to chair in the U.S. Our members recognize that gender equality in the boardroom encourages more responsible governance and leadership–and enables better decision-making and stronger corporate performance. They’re also taking concrete action: Our public company members reached an average of 30 percent female directors last year, up from an average of 22 percent when we first launched in 2014.
In addition to appointing a greater number of women to directorships and other senior leadership roles, we’re witnessing more executives who are embracing their role in shaping company culture and leading by example. Many are actively participating in inclusion initiatives such as unconscious-bias training or employee forums, sending a powerful message to managers and other colleagues throughout their organizations.
Pressure from investors, amidst growing evidence that diversity and inclusion positively impact the bottom line, is also driving action. As investors increasingly seek to incorporate gender-related data in their investment analyses, more companies will be inclined to disclose statistics around equality. The Bloomberg Gender-Equality Index (GEI) is already demonstrating evidence of that trend: The 2019 index more than doubled this year to include 230 firms committed to advancing women in the workplace. The GEI provides investors with comprehensive, standardized information to measure how companies are promoting gender equality across company statistics, employee policies and benefits, gender-conscious product offerings and community support.
It’s exactly the kind of data that matters to female investors, the second pillar of this trend. More than ever, women are involved in making significant investment decisions. At the institutional level, companies like BlackRock and Vanguard are bringing more women into the boardroom. At the individual level, women are now in control of more capital than men in the U.S., a percentage that will be global by 2025. As the transfer of wealth and decision-making power continues, companies’ ability to attract capital will be directly linked to their metrics on issues important to women, with gender equality at the top of that list.
Disclosing data around gender equality is also proving critical for talent recruitment and retention. Companies are competing in a global arena for the best talent. Firms cannot afford to maintain recruitment and promotion policies that fail to tap into the existing pipeline of qualified women. They must also respond to the demands of a growing base of highly qualified candidates who value diversity and inclusion and want to work for firms with demonstrated commitments to equality, best-in-class policies and public engagement. The winners in the market, across all industries, will be those organizations that can attract and leverage the full talent pool to build their workforce.
Gender equality yields crucial benefits for companies. Firms that emphasize inclusion benefit from heightened collaboration, increased innovation, greater productivity and, often, better bottom-line performance. Diversity and inclusion are not only ethical imperatives; they are essential practices for business success. The good news for companies and the world alike is that–thanks to the driving factors outlined above–we can expect the evolution of equality to continue and accelerate as firms strengthen their commitment to promoting women in the workplace through leadership and greater transparency.