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].
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.