How inclusive is Corporate Malaysia?

 

The Parker Review Report was released early this year, marking five years since the publication of the first “Report into the Ethnic Diversity of UK Boards” in 2017 by Sir John Parker and the Parker Review Steering Committee.

We read this year’s update report with interest, reviewing the metrics and the results of the target set in 2017 – that each FTSE 100 board should have at least one director from a minority ethnic group by the end of 2021.

We then decided to do a review of the FBM 100 here in Malaysia, as well as the KLCI to see how Corporate Malaysia is getting on in achieving our diversity targets, especially in the area of gender diversity.

Our last research piece, carried out over 10 years ago, indicated that women on boards did improve the performance of companies. Fast forward to today, we are looking at whether Corporate Malaysia is indeed serious about gender diversity, as well as inclusivity.

The results are interesting, to say the least. Let me give you the broad results, starting with the FBM 100 companies:

• There were 903 directors in the top 100. This gives you an indication of the size per board.
• 73.5% of the directors are men and 26.5% are women, which still puts us shy of the 30% goal.
• Of the 100 chairs, 97% are men, which means only 3% are women.
• 58 out of the 100 companies do not meet the 30% target of women directors on their board; while 42 met the target.

Next, we look at the FBM KLCI companies:

• There were 304 directors in the FBM KLCI companies. This gives you an indication of size per board in these 30 companies.
• 70.7% of the total directors are men, while 29.3% are women. This means they have reached the 30% target for the FBM KLCI companies in terms of gender diversity.
• Of the 30 chairs, 96.7% are men and 3.3% women.
• 18 out of the 30 companies met the 30% target of gender diversity, while 12 companies did not.

As the world is moving from gender diversity to Diversity, Equity and Inclusion (DEI), we decided to also review the FBM 100 and the FBM KLCI 30 in terms of inclusivity.

With the FBM 100 companies, we found that:

• Ethnic minorities in the community comprised 46.9% of the boards, while other ethnic groups made up 4.6%.
• The small representation of women chairs was from the ethnic majority.
• Women independent directors represented 74.5%, with the balance as non-independent directors.

With the FBM KLCI 30 companies, we found that:

• Ethnic minorities in the community comprised 43.8% of the boards, while other ethnic groups made up 9.0%.
• The single woman chair was from the ethnic majority.
• Women independent directors represented 84%, while 15.7% were non-independent directors.

In reviewing both the top 30 and 100 component stocks in the FBM KLCI 30 and FBM 100, what was clear is that there are some companies that need to reconsider their board composition when they embark on their next exercise to refresh their board members. There is also a clear absence of women leading Corporate Malaysia boards.

However, what I found most fascinating was that Corporate Malaysia is very inclusive when it comes to ethnic representation, and is not in the same predicament that many other nations are facing, where they are trying to move away from “male, pale and stale”.

The history of some of our companies in the KLCI 30 and FBM 100 could be part of the reason for the ethnic diversity. However, I was impressed with the data, which clearly shows we are ahead of the curve globally when it comes to inclusivity.

Gender equality, next? - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.