Diversity and gender diversity policies: a matter of sound governance for banks
Frank Elderson, and Elizabeth McCaul, both members of the Supervisory Board of the European Central Bank (ECB), called to improve faster gender diversity and diversity policies at the management bodies of European banks. According to them, diversity is a supervisory priority, as diverse boards make better business decisions. The ECB data reveal that there have been improvements in banks’ diversity policies, which include diversity on education, experience, geographical provenance, and age in addition to gender. According to the authors, banks have to set more credible and ambitious diversity targets. In the case of gender diversity, not only because it is fair but because it improves governance, but also to comply with European regulation.
Main findings of the post are the following:
- Banking is still a man’s world. Out of the 361 CEO appointments made between 2020 and 2022 at the significant institutions (SIs) directly supervised by the ECB, as well as at their subsidiaries, more than 300 were men. Also, in the same period, only 36% of members of boards newly appointed in SIs were women.
- Regarding gender diversity targets for management bodies, on average banks only raised them from 32% in 2020 to 34% at the end of 2022. But according to the ECB the corporate board of a publicly listed bank can only be considered balanced when each gender makes up at least 40% of its composition.
- Gender balance is not only a priority for the ECB. At the end of 2022, the co-legislators formally adopted the Women on Boards Directive, and all EU Member States are expected to incorporate this EU directive into national law within the next two years. By 2026, companies will need to have 40% of women among non-executive directors or 33% among all directors.