Why New Zealand could move faster on board diversity

Board diversity, and broader DEI (diversity, equity and inclusion) has become increasingly politicised of late, but it isn’t something that should take a back seat, including when facing a multitude of challenges. In fact, now could be the perfect time for your board to ramp up its thinking to consider the value of diversity and ensure your organisation remains sustainable through tough economic times. 

In a groundbreaking move in 2021, the United Arab Emirates (UAE) mandated all listed companies must have at least one female director on their boards – a decision that reflected a significant shift towards gender diversity and inclusion in corporate governance, placing the UAE ahead of many nations, including New Zealand. 

The UAE’s decision to enforce female representation on corporate boards contributes towards greater gender equality. The mandate aligns with the global trend of recognising the importance of diverse perspectives in enhancing corporate governance and decision-making. 

That bold step forward for the UAE was part of recognising that policies were needed in order to tackle structural gaps to ensure women had access to employment, education and finance, post-Covid. 

“It was and still is a crucial wake-up call for New Zealand’s corporate sector to reassess and enhance its approach to board diversity,” says Kirsten (KP) Patterson, CE of the Institute of Directors New Zealand (IoD).  

For four consecutive years, women have held more than 50 per cent or more of public sector directorships in Aotearoa, (currently 53.9 per cent of public sector board roles), as outlined in the recent stocktake by the Ministry for Women. 

The picture in New Zealand is mixed, according to Patterson. 

“While we’ve made significant headway and the governance landscape is shifting, we still have some male-only boards of listed companies in New Zealand,” she says.   

As a country, New Zealand is also behind its Australian neighbours who celebrated the last of their all-male ASX Boards in 2021, although there is some indication that the occasional all-male board is sneaking back in. 

The UAE set a strong and powerful precedent for other countries to follow suit at a time when there was a serious need to address their own economic recovery. 

In today’s governance landscape, a diverse range of skills and thinking on boards is beneficial to tackle the sea of challenges. Research shows gender diversity on boards enables a wider range of issues and perspectives to be considered, and, as a result, generates innovative solutions. 

Where the UAE fast-tracked the move on board diversity, in contrast, New Zealand’s progress in this space has been more gradual. 

There are many benefits of gender diversity beyond a matter of equity, yet in Aotearoa, several companies have yet to appoint a female director, as illustrated in the New Zealand Stock Exchange (NZX) statistics.  

The IoD has continued to lead the charge in governance by creating opportunities and programmes that enhance and improve board diversity in Aotearoa New Zealand through programmes such as Mentoring for Diversity and its Pacific advisory group. These initiatives help to ensure opportunities are available to grow diverse boards and bring new talent through the governance pipeline. 

Diversity on boards continues to build momentum, and Patterson says, “the importance of this cannot be overstated”. 

“Diverse boards are better equipped to understand and respond to the needs of a varied customer base and bring a wider range of perspectives and experiences, which enhances problem-solving and decision-making,” Patterson says. 

By identifying where improvements can be made, including a re-evaluation of board composition strategy, Aotearoa listed companies can continue to improve diversity. This includes: 

1. Setting clear targets: establish specific, measurable targets for gender diversity on boards which should be publicly disclosed and integrated into the company's broader corporate governance framework.
2. Enhance recruitment processes: broaden the criteria for board appointments to include a wider range of experiences and backgrounds, this includes utilising executive search firms that are committed to diversity to identify potential candidates.
3. Develop a pipeline: invest in leadership development programmes to prepare women and other underrepresented groups for board roles. This could include mentorship programmes, leadership training and networking opportunities.
4. Foster an inclusive culture: create a board culture that values and encourages diverse perspectives, including providing ongoing education and training on unconscious bias and inclusive leadership.
5. Regularly review board progress: implement regular assessments of board diversity and adjust as needed. This could involve annual reports on diversity metrics and the effectiveness of initiatives.

By setting a mandatory requirement, the UAE ensures gender diversity is not an optional or aspirational goal, but a concrete standard. The UAE’s mandate illustrates how policy can drive meaningful change because while voluntary measures are important, there is a strong case for more robust regulatory frameworks to ensure accelerated progress. 

*This article was partially generated using AI.