Diversity regulations in Hong Kong are now broadly in line with international best practice, but more must be done by listed companies to implement these regulations and, in particular, to take diversity into account in appointment of directors and senior management.
Hong Kong companies are also being urged to set measurable objectives against which to assess board diversity and nominating committee processes.
These are the findings of Linklaters new report published in collaboration with the 30% Club Hong Kong titled “Nomination and Diversity on Hong Kong Boards: Best Practice and In Practice."
The report is the first to examine Hong Kong’s progress one year after the Hong Kong Corporate Governance Code was amended to introduce “comply or explain” requirements around diversity policies.
The 30% club last Thursday held its second 30% Club Boardroom Lunch, which brought some 90 women aspiring to be directors in face to face contact with some of Hong Kong's leading companies.
This year 60.9 per cent of companies in Hong Kong have at least one female director, compared with 59.3 per cent two years ago. The share of directors' seats held by women over the same period has risen from 10.67 per cent to 11.14 per cent. As the report concludes, there's been some progress but there's room for a lot more.
“Although the amendments to the Corporate Governance Code and the efforts made by certain listed companies to comply with the diversity requirements represent a big step towards greater diversity and more transparent nomination processes, there is still considerable room for progress," says Alex Bidlake of Linklaters.
Among other things, the report recommends that listed companies should have a diversity policy in relation to both board and senior management, and publish on their website both the policy and their level of compliance with that policy.
Companies should also make greater use of external search firms, and provide specific training to directors on issues such as unconscious bias and the impact of diversity, says the report.
"We would also hope to see the regulators scrutinizing more closely the nomination practices and diversity of both existing listed companies and new applicants for listing,” added Bidlake.
Su-Mei Thompson, CEO of the Women’s Foundation, noted that a year after the introduction of the Code Provision on board diversity and 18 months after the launch of the 30% Club in Hong Kong, a number of leading companies have added female directors in the past year and many others now have a board diversity policy which should result in more women joining boards.
Meanwhile, in terms of supply, a growing number of companies have introduced initiatives to develop the pipeline of women for senior executive and non-executive roles and many women are also taking the initiative to participate in directors’ training to enhance their knowledge and qualifications.
“We firmly believe that board diversity can meaningfully advance not just our business goals at Standard Chartered but also our clients’ business goals," says May Tan, CEO of Standard Chartered Bank (Hong Kong) Limited.