For International Women’s Day on March 8, we celebrate the social, economic, cultural and political achievements of women and support the call to accelerate gender equality across the world. Beyond the obvious social argument in favor of gender parity, improving gender diversity is also a huge opportunity for both companies and countries to create value.
Research by McKinsey shows that companies with greater gender diversity on their executive teams are more likely to experience above-average profitability compared to companies with lower diversity. There are also strong links between greater gender diversity and levels of innovation and productivity.
Improving gender equality also presents huge opportunities for emerging markets' economic development. For example, India could add US$770 billion to its annual gross domestic product (GDP), an 18% increase over business-as-usual GDP, by 2025, through advancing women's equality.1
At Matthews Asia, we strive to engage with companies in our portfolios that lack women on their boards within the broader context of the skills, expertise and competencies required for effective leadership. This can mean writing to companies to encourage improvements in their inclusion policies and in some cases voting against board director nominations.
“Leveraging an equitable workforce for the long-term growth of a business requires leadership with both inherent and acquired diversity.”Kathlyn Collins. Vice President, Head of Responsible Investing and Stewardship
Insights From Our Investment Team
Kathlyn Collins, Vice President, Head of Responsible Investing & Stewardship
Leveraging an equitable workforce for the long-term sustainable growth of a business requires leadership with inherent and acquired diversity. Diversity in gender, as well as in age, experience, nationality and skill set, is also critical to the effectiveness of boards and their management teams.
Some emerging markets are trying to address a lack of gender diversity on their boards with tools such as gender quotas and tenure limits but these improvements aren’t enough. Minority shareholders investing in such firms can advocate for diversity themselves through their voting rights and by signing up to local public policy efforts aimed at changing the behavior and practices of companies and boards.
By taking active strides to reform policy and evoke change, we believe emerging market companies and countries can create a mutually beneficial, virtuous cycle of higher standards for gender diversity. And investors have an opportunity to take the lead in this movement and unlock significant growth potential for countries, companies and women.
Inbok Song, Portfolio Manager
Gender diversity among technology-driven companies in Asian emerging markets is generally low compared to other industries. Higher education and the early career stage still seem to be the strongest platforms for women to pursue their interests and align their capabilities. The key issue is whether they can find long-term career paths. When it comes to senior positions, socio-economic factors, such as family-related responsibilities and lack of advancement opportunities, still come into the picture. When we speak with companies, many of them recognize the importance of gender diversity and are making efforts to address the issue through hiring and support for networking and mentorship programs but it seems like we are still at the early stages on these issues. An individual’s career is a continuum and we need more mid-level representation so that female workers can grow into senior positions and become board members.
As can be seen from the chart, many emerging markets are making progress having more women on corporate boards but there is still a lot to be done. On International Women’s Day, we celebrate the achievements that have been made so far and look forward to greater achievements in the years to come.
Note: 1 McKinsey, 2018. The Power of Parity: Advancing Women’s Equality in Asia Pacific
The views and information discussed in this report are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. Investment involves risk. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in small- and mid-size companies is more risky and volatile than investing in large companies as they may be more volatile and less liquid than larger companies. Past performance is no guarantee of future results. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.
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