Paul Hastings Study of Major Global Exchanges Reveals Few Address Gender or Diversity in Listing Requirements or Corporate Governance Codes

October 07, 2014

Washington, DC – The world’s largest stock and securities exchanges have significant room for improvement in their approach to diversity, particularly gender diversity, for listed companies, according to “Breaking the Glass Ceiling: Women in the Boardroom – A Study of Major Global Exchanges,” published by leading global law firm Paul Hastings. The study of exchanges in eight countries and the European Union found that few address diversity-related issues in their stock listing requirements or recommended corporate governance codes. However, some exchanges are taking action, with exchanges in Australia, New Zealand, Europe and Asia leading the way, while those in North American fall behind.

The study, which is a supplement to the full report, “Breaking the Glass Ceiling: Women in the Boardroom,” examines the influence that major exchanges can have – and, indeed, are having -- on increasing the number of women on corporate boards and improving transparency on the processes used to fill board seats.

“Exchanges can play an important role in advancing women’s representation on corporate boards because they are in a position to incent companies to examine their own diversity policies and initiatives, and increase the importance of such issues to shareholders,” said Tara Giunta, editor of the report and a Litigation partner at Paul Hastings. “There is significant room for improvement, and we hope this study will advance the discussion on how to move forward,” she added.

Other key findings of the study include:

The major exchanges in Australia, New Zealand, and Hong Kong have made the most tangible progress. These exchanges all require listed companies to disclose information on board gender composition and their efforts to encourage gender diversity.
Australia’s reporting recommendations and enhanced disclosure for corporate boards’ gender composition have been effective in expanding the diversity profile of Australian Securities Exchange-listed companies.
While Europe continues to be a leader in public and private initiatives to increase gender parity on corporate boards, only a few European stock exchanges have diversity-related requirements provisions for listed companies. However, the European Commission has proposed significant legislation for EU Member States that would require large companies to disclose nonfinancial and diversity-related information in annual reports and to increase women’s presence on corporate boards of certain listed companies to 40% by 2020.
In the United States, the Securities and Exchange Commission rules require companies to disclose if and how they consider diversity when searching for a new board member. However the disclosure rule has not apparently had any measurable effect, as women remain greatly underrepresented on corporate boards of US listed companies. The New York Stock Exchange and Nasdaq stock exchanges have taken little action to address the lack of diversity on boards of listed companies.

Paul Hastings has been working independently, as well as collaborating with various organizations, to spark an informed dialogue on best practices, raise awareness, and help enact positive change around the issue of gender parity. In 2011, the firm launched “Breaking the Glass Ceiling: Women in the Boardroom,” an ongoing study of the approaches countries around the world are taking to address this issue. The report provides insights into differences in viewpoints and the varying degrees of government involvement in mandating stronger representation – examining legislative, regulatory, and private sector developments. The report explores 35 jurisdictions and is part of an interactive website that includes video interviews with those who are making important contributions to the issue.

Paul Hastings is a leading global law firm with a strong presence throughout Asia, Europe, Latin America and the United States. Through a collaborative approach, entrepreneurial spirit, and commitment to client service, the professionals of Paul Hastings deliver innovative solutions to many of the world’s top financial institutions and Fortune 500 companies.