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Bonnie Chan, co-chief operating officer of Hong Kong Exchanges and Clearing (HKEX), speaks during a special market closing ceremony on March 8, part of the global “Ring the Bell for Gender Equality” campaign to celebrate the power of diversity and the contribution of women in markets and communities, at HKEX in Central. Photo: May Tse
Opinion
Macroscope
by Kim-See Lim
Macroscope
by Kim-See Lim

How stock exchanges can help Asia be a leader on gender equality and diversity

  • Stock exchanges have a critical role to play in convincing companies to support sustainable development and drive inclusive growth
  • Their influence on markets can also help rally the private sector to increase women’s participation in business and close the gender pay gap
Kim-See Lim
Kim-See Lim
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The clock is ticking on gender inequality in listed companies in Asia. Stock exchanges in Hong Kong and South Korea recently implemented rules to make single-gender boards of directors a thing of the past, joining exchanges such as the National Stock Exchange of India that have similar rules in effect.

However, the region still lags behind on many gender-related market metrics. Calls for greater diversity from policymakers, regulators, shareholders and civil society will only grow louder as sustainability and inclusion move up the public agenda.

Companies with gender-diverse boards and leadership tend to do better on a range of metrics, both financial and non-financial. Because of that, they can achieve a self-reinforcing momentum when they make improvements on diversity, with each improvement having a flywheel effect that creates significant results over time.

These companies need nudging, though. This is where stock exchanges have a critical role to play. Throughout March, stock exchanges around the world will ring the bell – or strike the gong, in Hong Kong’s case – for the “Ring the Bell for Gender Equality” event.

Held in partnership with the International Finance Corporation (IFC), World Federation of Exchanges, UN Sustainable Stock Exchanges (SSE) Initiative, UN Global Compact and UN Women, this annual event aims to raise awareness about the business case for women’s economic empowerment and opportunities for the private sector to advance gender equality and sustainable development.

Gender equality at work: how do Hong Kong, Singapore and others compare?

Rarely has there been a more opportune time to do so, given the outsize impact a multitude of crises – from the Covid-19 pandemic to climate change – are having on women. It will take another 132 years to close the gender gap, according to the 2022 World Economic Forum Global Gender Gap Report. As crises compound, women’s workforce outcomes are suffering.

Stock exchanges can drive change in a way that few others can. Globally, exchanges list more than 50,000 companies valued at more than US$90 trillion, according to the SSE Initiative. In many jurisdictions, the exchange defines what is expected from the companies listed on its markets.

They influence markets and help facilitate inclusive economic growth. They connect policymakers, investors and businesses to support sustainable development practices. They can play a crucial role in rallying the private sector to increase women’s participation in business.

There have been some positive developments to close the gender gap in listed companies in Asia. We have seen exchanges across the region implement rules to ban single-gender boards as more evidence mounts of businesses with diverse boards delivering higher returns.

According to a recent study by the IFC, the SSE Initiative and UN Women, Southeast Asia has the second-highest percentage of female chief executives of listed companies globally after Africa. In Malaysia, my home country, about a quarter of board seats are held by women, making it one of just four emerging markets globally where women hold more than 20 per cent of board seats.

Pedestrians cross an elevated walkway over a main road in Central, Hong Kong. Women in East and Southeast Asia have made significant progress in earning representation on the boards of major listed companies, but there is much work to do to catch up with their Western peers. Photo: AFP

But Asia still has work to do in many areas. On average, women hold just 13 and 19 per cent of board seats in East and Southeast Asia respectively. By comparison, they occupy 45 per cent on the Euronext-Paris.

Greater gender equality in operations and value chains means better talent, higher productivity, more innovation, more customers and better societal outcomes. Making even small inroads in closing the global gender gap could quickly yield strong results, with the potential to increase global gross domestic product by US$12 trillion by 2025, according to the McKinsey Global Institute. Failure to capitalise on these resources represents a substantial opportunity cost.
Stock exchanges have many tools at their disposal to help narrow the gender gap. They can strengthen market performance on gender equality by introducing requirements to report on gender-disaggregated data, including disclosing the salary gap between men and women, the make-up of the workforce, turnover rate, and board and senior management diversity policies, among other metrics.
They can address barriers to gender equality on company boards, for example through market education or creating directories of women board members. They can also lead by example through evaluating and disclosing progress on advancing gender equality, integrating gender equality into stakeholder relations through philanthropic and charitable spending initiatives, and promoting gender equality internally with their own targets and efforts to eliminate pay gaps.

They can also promote gender-focused products and services. These include supporting the listing of gender bonds and gender-focused exchange-traded funds, adapting IPOs of small and medium-sized businesses to improve access to finance and training for female entrepreneurs, and enhancing women’s ability to invest through women-focused education.

We have a long way to go to increase women’s role in corporate decision-making and in the private sector more generally. As we recover from the effects of the pandemic, we are reminded that the world needs more of us at the table, now more than ever. Stock exchanges can help us get there.

Kim-See Lim is regional director for East Asia and the Pacific at the International Finance Corporation

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