Gender Parity Gap: India's Boards Trail Global Counterparts

December 13, 2023, Mumbai – Russell Reynolds Associates (RRA), a global leadership advisory and executive search firm, unveiled 'Deciphering the Indian Boardroom,' a compelling report focused on the board demographics of India’s Top 200 NSE-listed corporations. These corporations collectively represent over 80% of the total market capitalization of all listed companies. The report offers a comprehensive examination of board structures and governance practices, providing valuable insights and drawing insightful comparisons with global counterparts.

The findings highlight a crucial observation - only 54% of directors are classified as independent, trailing significantly behind the robust independence observed in the FTSE 100 (73%) and the S&P 100 (86%). The disparity underscores the opportunity for Indian corporations to increase independence on Boards,  increasingly aligning with global standards on governance practices.

Despite India's early adoption of gender quotas, the report starkly illustrates that women occupy a mere 19% of board seats in the top 200 NSE-listed companies. This pronounced gender disparity, particularly in comparison to global counterparts like the FTSE 100 where women hold 42% of board seats, signifies a substantial opportunity for improving the metrics & not sticking to regulatory norms only. The report however highlights a positive trend in the inclusion of external women directors, propelled by regulatory mandates requiring at least one independent woman director on listed boards. While women comprise 27% amongst independent directors, they constitute only 10% amongst executive directors, pointing to the need to structurally address gender diversity issues in corporations to provide more opportunities for women to rise to the Board.

Sanjay Kapoor, a consultant at Russell Reynolds Associates, said “The 'Deciphering the Indian Boardroom' report serves as a strategic compass for Indian boards, outlining the roadmap for both present and future boardrooms. Good governance is an ever evolving process and snapshots like these allow relevant cross country comparisons, triggering aspirations to “better the best”.

Amit Jaiswal, consultant at Russell Reynolds Associates, emphasized, “There is a tremendous opportunity for India Inc to reimagine what their Board composition should look like in the next three to five years, and if it will be reflective of the diverse stakeholders the business serves. Demographic diversity on the Board can lead to more thorough and well-rounded discussions, better risk management, and more strategic decision making.”

The report also exemplifies the age dynamics of board members, in India, highlighting a shift towards hiring younger talent. With women board members in the top 200 companies averaging 59 years compared to their male counterparts at 62, it appears that women are joining Boards at a younger age than their male counterparts. Further, whilst the average age of board members is 61 years, the range spreads between 26 to 94 years.

Key Findings:

India's boards composition and regulations

• India's board regulations demand Boards must comprised at least 50% independent directors if chaired by an executive and 33% if the chair is an executive director, a contrast from the UK and US where listed entities are required to have a minimum of 50% independent directors, excluding the chair. Across the Top 200 NSE-listed companies, only 54% of directors are independent, a notably lower figure compared to the UK's FTSE 100 with 73% and the US's S&P with 86% independent directors.
• Despite making progress in promoting gender diversity through the adoption of quotas, gender parity is still lagging in India with only 19% women in board seats, trailing behind other regions. In contrast, in the FTSE 100, there is 42% women's representation in the boardroom.

Varying gender diversity in Committee Chair demographics

• Within the Top 200 companies, there are varying levels of gender diversity across different committee chairs. The highest representation of women is observed in CSR committee Chairs, with 28% of these roles being held by women. Nomination and Renumeration Committee (NRC) Chairs follow closely behind, with women holding 26% of these chair positions. However, there is a significant gender imbalance in Audit Chairs, with only 10% being women. More focused effort will be required to improve gender diversity in these Chair roles.

Expertise and CSR Committee Governance in Boards

• Nomination and Remuneration Committee Chairs in India lack important CHRO experience, with only 4% having a background in CHRO roles. The absence of NRC Chairs with CHRO experience in the technology industry underscores a potential gap in human capital expertise in an industry which believes Human Capital is key to its success.
• Almost three out of five CSR Committee Chairs are independent directors, emphasizing the importance of strong governance in light of mandatory CSR spending.
• The financial services industry has the highest representation of independent CSR Chairs at 64%, indicating a greater emphasis on governance in this discretionary spend area. On the other hand, the consumer industry has the lowest representation at 47%, suggesting a potential focus area. The report finds that 26% of board chairs in the Top 200 companies in India also serve as CSR Committee Chairs. This dual role highlights the recognition of the importance of CSR and the need for commitment to board-level involvement in overseeing CSR initiatives.