Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.


The best of solutions journalism in the sustainability space, published monthly.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Mary Mazzoni headshot

More Women Are Serving on Corporate Boards, But Parity is a Long Way Off

By Mary Mazzoni

American companies are putting more women in leadership positions, but they still have a long way to go, according to recent research.

Within the Russell 3000, an equity index that tracks the 3,000 largest US-traded stocks, 82 percent of companies now have at least one woman on their board of directors—up from 77 percent in March of last year, according to financial data analysis firm FactSet. Less than half (47 percent) have boards comprised of less than 15 percent women, compared to 58 percent last year.

At the CEO level, only 151 companies within the Russell 3000—or roughly 5 percent of the index—are headed by women, but that still represents a marginal improvement over the 143 companies with female CEOs last year. These findings mirror recent analyses of the Fortune 500—in which only 24 companies are headed by women.

Though these firms are few and far between, companies with female CEOs are more likely to have women on their boards. “Of the 521 companies in the Russell 3000 that have zero female board members, only four have female CEOs,” Katherine Guerard, a training specialist with FactSet, wrote in a blog post announcing the findings. The inverse is also true—when a company’s board is comprised of 40 percent women or more, the likelihood that it will hire a female CEO increases by a third.

Gender equality in leadership by industry

Of the Russell 3000’s nine sectors, utility companies have the best record for female leadership, with women representing a little over 11 percent of CEOs and averaging 22 percent female board representation.

While these numbers are promising, utilities comprise the smallest sector in the index by far, with only 99 companies, “so it’s difficult to draw meaningful conclusions,” Guerard of FactSet noted. However, the 420 companies representing the index’s third largest sector—consumer discretionary goods—are also boosting female representation in leadership. In this sector, 8.8 percent of CEO positions and 21.4 percent of board positions are now held by women.

The technology sector is among the worst performing when it comes to leading on gender diversity—which is no surprise given its prior track record. Although annual returns at highly gender-diverse tech companies are 5.4 percent higher on average, according to a 2017 report from Morgan Stanley, men still comprise over 75 percent of the tech workforce. Of the 339 technology companies listed in the Russell 3000, only eight have female CEOs—amounting to a measly 2.4 percent. “This sector also ranks near the bottom when it comes to female representation on boards of directors, with an average representation of 16.1 percent,” Guerard wrote.

Still, all is not lost for technology companies: Of all Russell 3000 firms, technology company Travelzoo has the highest female representation on its board, with 80 percent of board seats being occupied by women.

Gender equality is good for business, research shows

This latest report from FactSet comes after large asset managers like State Street Global Advisors, BlackRock and Vanguard called for improved gender diversity on corporate boards.

“Gender diversity is one element of board composition that we will continue to focus on over the coming years,” Vanguard CEO William McNabb wrote in an open letter addressed to the directors of all public companies, as reported by MarketWatch. “We expect boards to focus on it as well, and their demonstration of meaningful progress over time will inform our engagement and voting going forward.”

Though women’s leadership is an increasingly hot topic, such strong words from fund managers like Vanguard aren’t just trend watching or altruism—they reflect definitive data that shows gender diversity is good both for corporate governance and for business.

Publicly-traded companies with gender diverse boards—defined as women occupying at least 40 percent of board seats—see an average 12 percent higher return on equity compared to the Russell 3000 overall, according to another FactSet analysis released in March. These companies also demonstrate greater return on invested capital and lower price volatility than their peers, especially those with exclusively male boards, FactSet found.

Bank of America Merrill Lynch Global Research came to a similar conclusion in a report released earlier this year. “We found that gender diversity amongst executives, board members and managers consistently suggested higher returns on equity . . . lowered price volatility and lower earnings risk,” Savita Subramanian, head of U.S. equity and quantitative strategy for BofA Merrill Lynch Global Research, said in a statement.

Findings like these appear to be top of mind for fund managers. "Irrespective of a company’s industry, location or size, we believe that a lack of diversity on the board undermines its ability to make effective strategic decisions," Michelle Edkins, global head of investment stewardship for BlackRock, wrote in a letter to the Russell 1000 last year, as reported by Bloomberg.

Parity is still a long way off

Though data clearly shows the benefits, it will be a while before corporate America reaches gender parity in the boardroom, experts say. Recruitment firm Heidrick & Struggles predicts that we won’t see an even split in board appointments for men and women until 2025—“and that’s just for new directors,” wrote Quartz editor Heather Landy.

Note from the editor: In this week's Brands Taking Stands newsletter, we explore the potential impact from California's law mandating that women on serve on the boards of companies that are headquartered within the state. 

Image credit: Dane Deaner via Unsplash

Mary Mazzoni headshot

Mary has reported on sustainability and social impact for over a decade and now serves as executive editor of TriplePundit. She is also the general manager of TriplePundit's Brand Studio, which has worked with dozens of organizations on sustainability storytelling, and VP of content for TriplePundit's parent company 3BL. 

Read more stories by Mary Mazzoni