EY: Power & Utilities firms losing ground in diversity

13 April 2015 Consultancy.uk

The Power and Utilities industry is losing ground when it comes to the number of women in the boardroom, research by EY shows, with the number now at 17%. According to the firm, action is needed as diversity strongly contributes to a company’s performance and its return on equity. For companies to gain the financial benefits, the percentage of women in boardrooms needs to be at least 30%.

Professional services firm EY recently released a report on the gender balance in the Power and Utilities (P&U) industry, titled ‘Talent at the table: Women in Power and Utilities Index 2015’. To create the index, the firm ranked the top 200 utilities by revenue by assigning weights to women in executive positions.

Diversity issue
The research shows that the number of women in the boardroom of these companies has fallen, from 15% in 2013 to 14% in 2014. The number of non-executive directors has also decreased, from 18% to 17%. Commenting on these figures, Alison Kay, EY’s Global Power & Utilities Leader, says: “These findings are hugely disappointing. The industry can’t afford to go backward. For utilities to reap the rewards of more diversity in the boardroom, change has to take place more quickly.”

Percentage of women in P&U

The report, however, also highlights some signs of progress. The number of female board executives increased from 4% to 5% and the percentage of women in P&U senior leadership teams from 12% to 13%. “It’s encouraging to see more women in executive positions as these are the roles with influence, strategy and profit and loss responsibility,” says Kay. “But it’s not time to celebrate yet. The total percentage of women in boardrooms is still down. The sector clearly needs to focus on achieving gender-balanced boards.”

Regional differences
The research shows big regional variations. With 14% of its P&U board executives being female, Africa and the Middle East lead the pack when it comes to proportion of women on boards, a percentage that is double the proportion of Europe, the second strongest performing region. In the US and Canada 5% of P&U board executives are female, in Asia-Pacific only 3% and in Latin America and the Caribbean the number is zero.

Regional top performers

The US scores the highest in terms of women on senior management teams (18%), followed by Latin America and the Caribbean (17%), Europe (11%) and Asia-Pacific (10%). Africa and the Middle East have the lowest proportion women in senior leadership teams at 7%.

According to EY, businesses should take diversity seriously as it coincides with business performance. Companies that embrace diversity outperform companies that don’t, with an average return on equity (ROE) of 8.5% for the global top 20 companies for gender diversity, compared to 7% for the lower 20. “The case for gender diversity is indisputable: having more women on the board clearly links to better business performance. By looking at ROE we can see the impact of diversity on performance, management efficiency, sales growth and changes in capital costs. The bottom line is clear — companies that perform better on diversity and have more women in boardroom positions are making millions more in profit,” comments Kay.

Diversity affects ROE

EY concludes by saying that action is needed to accelerate change. To achieve gender parity to the level at which companies will reap the financial benefits, women must represent 30% to 40% of boardroom positions. “Based on today’s numbers, we need 553 more women appointed to board-level positions in order to reach the parity target of 40%. And for every 5% increase in the number of female board executives there must be another 24 women appointed CEO or to similar executive positions. Reaching gender parity won’t happen unless we take action,” says Kay.

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