Women on boards: Five reasons why the UAE is right to set a quota
Emirates Securities and Commodities Authority (ESCA)’s quota of one woman per listed company board was made law last month; Aurora50 believes this will support the UAE’s Vision 2021, attract millennials to your business and meet investors’ diversity requirements.
It is now a legal requirement to have one woman on every listed board in the UAE. Perhaps you’re celebrating. Or perhaps you consider mandated quotas the wrong route to take.
Let’s look at some of the reasons why it is right to enshrine this quota in law.
1. UAE has healthy pipeline of female talent
Almost two-thirds (58 per cent) of women in the UAE work, the highest level in the region and on par with the US and UK, according to the World Bank.
That makes for a healthy pipeline of women workers to climb the ladder to the executive level and beyond to the board.
Yet only 3.5 per cent of listed companies in the UAE do currently have a woman on board.
2. Investors are insisting on boardroom diversity
If you’re a corporation looking for investment to expend, you may soon need to prove your diversity in the boardroom.
At the World Economic Forum in Davos last year, Goldman Sachs’ CEO, David Solomon, announced that the bank would only underwrite the IPOs of American or European companies unless they had at least one “diverse” board member (a figure it has since raised to two).
As more companies look to prove their commitment to diversity and inclusion, that’s a stance likely to be followed by other investment banks and venture capitalists.
The UAE will benefit from a sustainable and diversified economy. – Vision 2021
3. Millennials want inclusivity from senior management
If you want to attract millennials and generation Z to your employment, understand that they won’t want to work for you unless you’re an inclusive business – which they equate to a “forward-thinking mindset”.
Respondents in Deloitte’s 2018 global millennial survey who thought their senior management teams were diverse said the business was able to help employees be ethical, creative, to develop talent and nurture emotional intelligence.
Almost three-quarters said their organisation was more innovative when it was also more inclusive.
Don’t think it matters what millennials think? By 2025, only one-quarter of your workforce will be older than this cohort, born from 1981 on, says Deloitte. In MENA, 57 per cent of the entire population is millennial.
4. More diverse UAE boards aligns with Vision 2021
In 2010 the UAE government created a target for the future with Vision 2021, to make the UAE one of the best countries in the world to live and one of the best places in the world to do business.
Putting women onto boards comes under two of the six national priorities: a competitive knowledge economy; and a cohesive society and preserved identity.
The Vision states: “The UAE will benefit from a sustainable and diversified economy, flexible in adopting new economic models, and capitalising on global economic partnerships to guarantee long-term prosperity for current and future generations of Emiratis.”
It also says it wants to “harness the full potential of its national human capital” by “nurturing home-grown public and private sector leaders while attracting and retaining the best talent”.
5. Quotas by law bring change more quickly
Esca, the Emirates Securities and Commodities Authority, announced the quota of one women per listed company board in the UAE in March 2021. Although we do not yet know whether it will make the quota ‘soft’ or ‘hard’ – that is, whether penalties will be attached -we can easily see data for the results of quotas internationally.
India has set small fines of IR50-500,000 ($688-6,883) against its own quota of one woman per board. In France and Belgium, directors of boards that fail to reach the target will not be paid any compensation.
In Spain, which has a ‘soft’ quota, companies failing to comply risk losing government contracts and subsidies.
The two best examples both come from the top of the UN’s gender equality list.
In Norway, the 40 per cent female quota made law in 2003 has now been reached and exceeded; today it sits at 43 per cent.
Board members are unable to access half the available talent for new board nominations
The Scandinavian country with the highest quota in the world also made it the hardest quota: in 2008, a law was passed to dissolve companies that failed to comply.
Yet in nearby Iceland, which passed a ‘soft’ quota of 40 per cent in 2010 without sanction, the figure has still reached 26 per cent.
The two countries sit at 1 and 2 respectively of the United Nation’s Global Gender Inequality Index, which suggests that quotas work, with or without sanctions.
The UAE is at no.31, ranking first in the Arab world and 18 for its commitment to advancing women’s rights. Achieving the quota is likely to send it soaring up the chart.
Lack of women on boards is an access issue
Ultimately, we at Aurora 50 do not see the issue of women in the boardroom as being a blame game. We believe it is, quite simply, an access issue.
In 2019 women still held only 16.9 per cent of global board seats (Deloitte’s Women in the Boardroom). That means boardrooms are full of men meeting and networking with male board members and male executives.
Board appointments are rarely advertised and so, when it comes to new nominations, board members are simply not able to access half the available talent… female talent.
Aurora50 allows men and women to network together to discuss board-level issues at its monthly workshops and annual summit, while running the Pathway20 accelerator programme to take women board directors up the ladder of their board career.
We also have a series of partnerships that show the UAE’s commitment to gender parity as part of national development, from Adnoc to Mubadala and, most recently, the UN Central Bank, which regulates two-thirds of companies on UAE’s stock exchanges.
If you are a woman looking to find your first board appointment or to build out your board career, or a company looking for support, contact us. Let’s add the female touch to every UAE listed board as soon as we can.