What role can capital markets play in boosting gender diversity at work – and beyond?

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Laura M. Cha, Chairman, Hong Kong Exchanges and Clearing (HKEX)

• Accelerating gender diversity in the workplace could boost productivity and create economic growth.
• Promoting more women to leadership positions will help them to lead from the front when it comes to creating a more diverse global workforce that benefits from different perspectives and ideas.
• Companies across capital markets have an important role to play in encouraging and supporting gender diversity throughout the global workforce.

Women remain under-represented in the world’s workforce. More than 90% of men were participating in the labour force globally in 2022, versus 61.4% of women, according to the International Labour Organization.

And women that do work often see fewer career development opportunities than men. In 2023, for every 100 men promoted to manager positions, only 87 women achieved similar promotions, according to McKinsey’s Women in the Workplace Survey. This poll of 276 companies employing more than 10 million people also shows that women are underrepresented in the C-suite. The 28% of C-suite roles taken by women in 2023 is up from the 17% recorded in 2015 but much lower than the 72% of C-suite roles taken by men last year.

This lack of diversity in representation and opportunity is detrimental to the sustained growth we all want to see in the world. The International Monetary Fund believes gender diversity is a key driver of economic growth because it brings women’s unique skills and perspectives to the workplace, boosting productivity and innovation. It says closing the gender gap in labour force participation could increase GDP by up to 35% for countries with the highest levels of gender inequality.

So how can more women not only gain access to the labour force, but also climb the career ladder to reach leadership positions?

Change should come from the top. Female role models in leadership positions can set new standards of governance, create more opportunities for diversity and set examples to inspire wider social change. That’s why improving gender diversity at the top levels of business is vital to achieving widespread change throughout our workplaces and even our societies.

A top-down approach to gender diversity

Having more women in senior positions in companies is not only a matter of fairness and representation, but also a powerful way to promote gender diversity more widely and to empower women to pursue their career aspirations. It can have a positive impact on the rest of the workforce by breaking down stereotypes, creating role models and increasing women’s capacity to reach for higher positions. At Hong Kong Exchanges and Clearing (HKEX), five of our 13 board directors are women, and we are proud to take the lead on board diversity.

I am convinced that companies throughout the capital markets can and should take the lead on driving the gender diversity agenda. Over four decades, I have seen first-hand how capital markets can power economic growth, propel innovation, serve the real economy and channel much needed investment into the companies of tomorrow.

Capital markets are well positioned to address the gender diversity challenge. Companies require capital to support their gender diversity ambitions. Capital markets can connect investors with businesses that promote gender equality projects or that have gender diverse leadership.

Promoting gender diversity across capital markets

Regulation can also help by providing corporates with a target for their gender diversity journeys. As key players in the capital markets, exchanges define the regulations under which public listed companies must operate. This creates an opportunity to use regulations to promote gender diversity.

HKEX, for example, moved to end single-gender boards for new initial public offering (IPO) applicants in 2022. We gave all issuers until the end of 2024 to bring at least one female member into their board. Others are also stepping up. For example, the EU has adopted gender balance targets for company boards. India also requires public companies to have at least one woman director.

But solving the challenge of achieving gender diversity will require effort from across the capital markets. Encouragingly, there’s evidence of the necessary mobilization in other parts the industry.

The asset management sector, which manages trillions of dollars in assets, is using its influence and resources to support companies with strong gender diversity practices. Some of the world’s largest asset managers are already playing their part by integrating gender diversity criteria into investment decisions and using shareholder voting power to push for change. Some offer gender diversity-focused products to investors or collaborate with other organisations to promote gender diversity. Many use their research capabilities to analyse and share the impact of gender diversity on corporate performance.

Index companies are also making substantive efforts to promote gender diversity. Indices such as the Bloomberg Gender-Equality Index, Equileap Gender Equality Global Report and Ranking and Refinitiv (now LSEG) Global Diversity & Inclusion Index track company performance on gender diversity policies and practices. This should help drive capital flows into such companies. It will encourage businesses to improve their practices so they can be included in these indices, while also providing investors with transparent and reliable data on gender diversity.

Just like the movement to address climate change, achieving gender diversity is a global challenge that will require a whole-of-society effort. As an exchange, we are proud to play our part, but we want to see wider mobilization on gender diversity across the capital markets ecosystem.

As the world celebrates International Women’s Day on March 8, let’s mark the progress we have made but also think harder about how we can enrich our workplaces, create more opportunities and mobilize the talent all around us by furthering gender diversity at work.