The decision by the UAE Securities and Commodities Authority to make women’s representation compulsory on the boards of all listed companies will promote gender diversity and improve business prosperity, female business leaders said.
The SCA on Sunday mandated all listed companies in the UAE to have at least one female director on their boards.
“We believe that this will result in progressive results not only statistically, but more importantly, this will translate to business prosperity,” Sheikha Shamma bint Sultan bin Khalifa Al Nahyan, co-founder of social enterprise Aurora50, said.
“The strong link between gender-balanced boards with better governance and financial performance is well-established, both across academia and within corporate boardrooms.”
Achieving full gender parity in workforce participation in the GCC could add $830 billion to the region’s economy, or 32 per cent of gross domestic product, according to research by McKinsey & Company.
Currently, 28 out of 110 UAE-listed companies have at least one female director on their boards, but women only hold 29 out of a total of the 823 available positions, or 3.5 per cent of the total, according to Aurora50.
“Our hope is that boards will take this as an opportunity to review their nomination processes. It currently takes more effort to identify female talent, but the pipeline is available and growing,” Sheikha Shamma said.
Aurora50 established an initiative last year called Pathway20 that works towards increasing board-level female representation in the UAE, offering participants the opportunity to network with boards that need to appoint independent directors.
Across the GCC, only 14 per cent of 170 blue-chip companies monitored by State Street Global Advisors as part of its Fearless Girl campaign had a woman on their board as of April last year.
State Street Global Advisors began the campaign in 2017, targeting companies initially in the UK, US and Australia with no female representation. It extended this to Canada and Japan last year.
"Over the past four years, we have been actively engaging with companies on the subject of board diversity and, out of the 1,486 companies we identified as not having any woman on their board, 862 (or 58 per cent) have added a female director. We will continue our engagement and voting efforts in 2021," Emmanuel Laurina, head of Middle East and Africa at State Street Global Advisors and 30% Club Mena steering committee member, told The National.
Most boards in the GCC have been supportive of enhancing gender diversity but cite a limited pool of suitable candidates, according to SSGA's research.
Other obstacles to board diversity include excessive reliance on existing director networks and requirements that all director nominees have experience as a chief executive, it added.
The main obstacle preventing greater board diversity "is just a mindset", Joy Ajlouny, co-founder of start-ups Fetchr and Bonfaire, said.
“The fact that it has been said that there is a limited talent pool of women is ridiculous,” she said.
“Women are underrepresented on boards and have been for years. It is a fact that publicly traded companies with one diverse board member – a woman – saw a 44 per cent jump in their average share price within a year of going public, while those with no diverse board members saw only a 13 per cent increase in share price,” Ms Ajlouny said.
With the inclusion of more GCC equity markets in FTSE and MSCI emerging market indexes, State Street Global Advisors expects listed companies in the region to face more pressure from institutional investors to improve governance standards and gender diversity.
The Dubai Financial Market has been advocating the empowerment of women in capital markets in recent years through initiatives such as the eBoard platform that connects board candidates with listed companies, Hassan Al Serkal, chief executive of the bourse, told The National.
“As a publicly-listed company, the DFM has also been leading by example having women in its board formations since inception,” he said.
A report by credit rating agency S&P Global on Monday called for the strengthening of corporate governance practices in the GCC, but said gender diversity is improving.
"We see progress on gender diversity and expect to see more female involvement in senior management and board positions," it added, pointing to First Abu Dhabi Bank's recent appointment of its first female chief executive.
“Ideally, the boardroom should reflect the real world, where women make up 50 per cent of the population. Women should also make up 50 per cent of every board,” Briar Prestidge, founder and chief executive of Prestidge Group, said.