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Women in leadership: A look at global corporate and political trends

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      By Calvert Research and Management

      Washington - Numerous studies link a greater inclusion of women in the workplace with material financial benefits for businesses, countries, capital markets and the world writ large. Closing the economic gender gap by 2025 could increase global GDP by $5.3 trillion, according to the World Economic Forum (WEF).1

      In 2016, the Peterson Institute for International Economics published research that analyzed approximately 22,000 firms globally, finding a significant link between higher levels of females in C-suite management and firm profitability.2 In 2018, McKinsey surveyed over 1,000 companies across 12 countries; its results also affirmed the link between more diverse leadership and measures of profitability and long-term value creation.3

      Clearly, there is a strong business case for female inclusiveness, especially at the higher rungs of corporate management. In looking at female representation worldwide, our research shows that U.S. large-cap companies, represented by the S&P 500, have more women in corporate leadership than peers in Asia and Latin America, but lag those in Australia, Europe and Canada.


      Beyond the board room: value of gender-diverse teams

      While demonstrating the value of higher female representation at the top levels of corporations is powerful, it only examines a part of the picture. Looking across all levels of corporate management, we believe diversity among teams and team managers should also bring a material benefit.

      This thesis is harder to evaluate because disclosure of gender diversity at the employee level remains less robust than for executive ranks. Recent research, however, has shed some light on the issue, finding that gender-diverse teams are associated with innovation and market opportunities. Most recently, a 2017 study by Boston Consulting Group (BCG) and the Technical University of Munich examined 171 German, Swiss and Austrian companies and found a positive link between diversity and innovation, as measured by revenue tied to products/services launched in the past three years. A key measure of overall financial performance, EBIT (earnings before interest and tax) margins were also higher. Regarding gender, the innovation revenue boost begins once the proportion of female managers rose above 20%.4

      The study examined six types of diversity and found significant correlation to innovation among four: gender, career path, country of origin, and industry background. In 2018, BCG extended the research to cover employees at over 1,700 companies in eight countries across a variety of industries and company sizes. Again, BCG found a strong and statistically significant correlation between innovation and the diversity of management teams along the same four dimensions, as well as EBIT margins.

      Women's participation in political leadership

      As we consider gender equity in business decision-making, it is worth observing the measures of gender equity in political landscape well. Globally, significant gains have been made over the past 10 years by both the U.S. and its developed-market OECD peers. A look at where things stand in 2018 shows the U.S. significantly lagging OECD members, as a group. In 2018, women held 19.6% of U.S. Congressional seats, compared with an average 29.7% within the OECD, as shown in the exhibit below.


      In our view, as women worldwide continue to gain ground in political leadership, as well as in corporate board rooms and executive ranks, we will continue to see positive impacts to the corporate bottom line as well as economies and society as a whole.

      Bottom Line: Globally, research shows that companies with greater gender diversity have significant competitive advantages — affecting innovation and financial performance. Calvert has engaged with companies on diversity and gender equality for more than 10 years, catalyzing action and dialogue around these issues.