Lack of ethnic diversity in NZ companies ‘shocking’

By Jessica Tyson

The lack of ethnic diversity amongst the leadership of the country's top companies is “shocking,” barrister and researcher Cat MacLennan says.

MacLennan worked alongside AUT Professor Judy McGregor and Simplicity managing director Sam Stubbs on the annual New Zealand Census of Women on Boards released today. The census shows the slow progress of recent years continues, with boards of the top 100 publicly listed companies still overwhelmingly male and Pākehā.

"Of Aotearoa's population, 14.9 percent is Māori, 11.8 percent is Asian and 7.4 percent is Pasifika, she says.

"The fact that Māori, Asian and Pasifika people are so completely underrepresented on NZX's top 100 boards is an indictment."

According to the report, the proportion of women on boards increased 1.8 percentage points from last year and now sits just above the quarter mark at 25.9 percent.

McGregor, who founded the study, says, "I've been counting boardroom composition for 22 years and it has only gradually improved so that men now outnumber women by three to one. At this rate, it will still be more than a decade before boardroom equality is a reality."

The census names 11 companies that have no female directors, as well as recognising seven that have gender equality.

As an additional feature this year, companies were also asked for the ethnic makeup of their boards. Only 44 replied, with most not providing the requested information, citing excuses such as privacy and human rights concerns.

However, photos, biographies and names indicate that the boards of the top 100 NZX companies remain overwhelmingly Pākehā.

Stubbs says the largest 49 New Zealand companies, which KiwiSaver provider Simplicity invests in, are on formal notice to fully diversify.

He re-stated that Simplicity will engage in formal shareholder action regarding director appointments and retention by 2022 if companies have not achieved full diversity in governance by then.

"Diversity is critical to KiwiSaver returns. Extensive research shows that if companies aren't drawing from the deepest and widest talent pool, they will underperform," he says.

"Last year we said that New Zealand companies have five years to fully diversify, which allows for normal board rotation. The clock is ticking. Companies should be actively implementing their diversity policies, and be complete by 2022. 

"By then we expect to be significant shareholders in all of New Zealand's largest listed companies. If their governance isn't fully diversified by then, as shareholders we will start making it happen."

A positive finding of this year's snapshot was that there has been a large increase in the number of top 100 companies with visible diversity policies since 2018 - up from 76 to 92.

"However, the lack of progress in gender and ethnic diversity raises the question of whether companies see creating diversity policies as an easy alternative to actually implementing diversity," the report says.