COVID-19 magnifies demographic challenges in the Boardroom

March 24, 2020

A virus that focuses on older men should be a wake-up call for corporate lack of diversity.

Fabrice Houdart

In the past few days, I have discussed extensively how COVID-19 has magnified socio-economic inequalities in our capitalist system. Demographics is another challenge for companies that is amplified by the COVID-19 virus. The virus is not demographic neutral [read: Who is getting sick, and how sick? A breakdown of coronavirus risk by demographic factors].

Age: In China, the Brookings Institute points out that “more than 50 percent of COVID-19 deaths have been people who are over 70 years old”. A statistic that seems to be similar to what has unfolded in Italy. The mortality rate is consequently higher in countries with aging populations.
Gender: The sex ratio is also baffling. COVID-19 appears to disproportionately affect men and the mortality rate is much lower for women.

For corporations that have had challenges recruiting younger employees and are predominantly led by older men, this should be a wake-up call on the humongous corporate risks linked to a lack of diversity. Corporate boards continue to be mostly white, mostly male — and getting even older.

This lack of diversity in the private sector is best illustrated by representation of women on corporate boards [read this 2017 Harvard Review piece: Gender Parity on Boards Around the World].

In France as an example, the situation was so dire that in January 2011, the French Parliament passed a law, the ‘Loi Copé-Zimmermann‘, imposing a 40% female quota on the boards of CAC 40 companies by 2017, with an intermediary target of 20% by 2012. To date, companies are still struggling to reach these quotas.

This month, the Diligent Institute released its report “A few good women, Gender Inclusion in Public Company Board Leadership” (Published – March 2020). The report’s main finding is that “Globally, only 22% of corporate directors are women. Correspondingly, only 7% of board leadership roles globally are filled by female directors.”

Age is also an important issue; another 2018 Harvard review article points out that “most directors are closer to retirement age—the median age for a director at Equilar 500 companies was 62.7 in 2017—and board members over 60 are more prevalent overall than their more youthful contemporaries”. Yet, age diversity is often ignored: according to Out Leadership member firm PwC’s 2018 Annual Corporate Directors Survey, “only 21% of directors consider age diversity as very important—a stark contrast to the 46% who say the same about gender”.

Of course, gender and age diversity are only the most obvious aspects of the lack of diversity on corporate boards. In a recent article on our Out Leadership Quorum initiative, discussing LGBT+ representation on corporate boards: moving from the menu to the table, I pointed out the abysmal representation of LGBT+ people on boards. race or socio-economic backgrounds are other crucial aspects of diversity that should be monitored.

COVID-19 illustrates once again that conceding power for those hoarding it is not only the right thing to do, it might also become an urgent risk mitigation measure.

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