Despite the highest annual percentage increase recorded in the number of women sitting on corporate boards so far this year, the pace of change and results of Hong Kong companies are still well below those of their global counterparts, according to a report.

In its annual Women on Boards Report released on Tuesday, not-for-profit organization Community Business found out that out of 655 directorships on the Hang Seng Index (HSI), 73 of them are held by women, with female representation on the boards of the city's leading listed companies reaching 11.1 percent - up from 9.6 percent last year.

Worldwide, corporate life has long been dominated by men.

Given extensive evidence that enterprises with more women on their boards outperform those with fewer or no women directors, some experts warn that lack of progress in board-gender composition may impact companies' competitiveness.

Credit Suisse Research Institute reported in 2013 that the net income growth of firms with women directors averaged 14 percent in the past six years, compared with 10 percent for companies with no female board members.

In addition, a report by advocacy group Catalyst found that among Fortune 500 companies with three or more women on their boards, they outperformed those with no female directors for at least four or five years.

The latest Community Business' report tracked the representation of women on the boards of 50 listed blue-chip companies between Jan 3 last year and Jan 2 this year.

While the number of female directors and women directorships has seen the biggest increase since the report was first launched in 2009, the overall improvement in performance has been driven by only a handful of companies.

Still, nearly three-quarters of the companies have seen no improvement.

"These disappointingly slow moving numbers clearly show that there are still cultural and structural barriers facing women," said Fern Ngai, chief executive officer of Community Business. "That denies them full participation in Hong Kong's economic growth and excludes them from key decision-making positions."

As a potential solution, some countries, including Norway, India and Malaysia, are trying to legislate gender balance on corporate boards by introducing mandatory quotas for female board representation.

But Ngai said she doesn't believe in mandatory quotas. Instead, it is the shift of mindset to seek greater gender diversity that matters.

Multinationals, she observed, are more willing to change the makeup of boards to attract and retain the best talents. For family-controlled businesses in Hong Kong, where the corporate-board gender gap remains and women are virtually absent from boards in many companies, the broad diversity, including gender, age and ethnic diversity, is a big issue and one that should be addressed with a concerted and multi-pronged effort.

sophia@chinadailyhk.com

The shift of mindset to seek greater gender diversity is what matters to female corporate leaders in the city. Edmond Tang / China Daily

(HK Edition 03/04/2015 page8)