Central banks and sovereign wealth funds are failing to hire enough women, particularly in senior roles, according to a new annual study.

Another report on Asian companies showed a similarly depressing trend in certain sectors. Both reports caution that a lack of gender diversity could hurt the quality of organisations' decision making.

On Wednesday (March 7), the Official Monetary and Financial Institutions Forum (OMFIF), released a study to highlight the absence of women in global public investing institutions such as central banks, sovereign funds and public pension funds.

Its annual gender balance index (GBI) tracks the presence of men and women in senior positions of public financial institutions globally, weighted by seniority. Its latest findings point to a deterioration in women representation in central banks and even worse diversity in sovereign wealth funds (SWFs).

The latest survey said the GBI for central banks—which aggregates the performance of individual institutions weighted by their share of the global economy—fell from 30.6% in 2017 to 19.4% this year. A perfectly gender balanced institution would have a score of 100%.

The top echelons of central banking are heavily male-dominated. For instance, only 11 out of the 173 institutions included in the survey had a woman as governor. Not a single one is in Asia. 

The departure of just a few senior women can radically drop the percentage weighting. Janet Yellen, former chair of the US Federal Reserve, left in February, which along with the stepping down of some other women in senior positions caused North America’s regional score to drop from 68.6% to 24.5%, the OMFIF said.

GBI figures for sovereign wealth funds are worse. It placed the score for women in senior roles in the funds at just 12%, while for Asia SWFs it was 6%, down from 8% a year ago. New Zealand's Super Fund was the biggest outlier, with a score of 63%. 

Kat Usita, OMFIF economist and one of the report’s authors, believes the overall SWF score to be worryingly low.

“With the magnitude of public resources at stake, the quality of decision-making at sovereign funds should be informed by as diverse a set of views as possible. A more comprehensive approach to risk assessment can be expected from an investment committee that benefits from different perspectives,” Usita told AsianInvestor.

There are some statistics to support Usita's perspective. Bank of America Merrill Lynch also issued a study this week to coincide with International Women’s Day, assessing environmental, social and governance (ESG) factors such as board diversity, corporate policy on diversity and women in management. It found that companies that ranked well had lower subsequent price and earnings volatility than those with lower ESG scores.

WANTED: FEMALE BUSINESS LEADERS

The gender imbalance in Asian organisations is underlined in study after study.

The 'Corporate Women Directors' not-for-profit organisation released a report in 2017 that analysed female board representation on the 1,557 largest listed companies across 20 Asian countries. Australia and New Zealand had the best female representation rates of 27% and 22%, respectively. Taiwan, Japan and South Korea were the worst offenders for gender diversity; their top companies had female board representation rates of just 7.7%, 6.9% and 2.4%, respectively. 

This can be a problem on company performance. A 2017 McKinsey report found that in Asia, companies with higher women’s representation on the executive committees outperformed others by 44% on return-on-equity and 117% on earnings before interest and taxes.

Similarly, Insead’s Emerging Markets Institute (EMI) released another study of gender imbalance senior Asian management on March 5. It revealed that in the decade up to 2017, the hiring of female talent in leadership roles in finance climbed by just two percentage points. The study also noted that while women comprised 67% of entry level roles in 10 multinational banks in Singapore, this dropped to 20% at the managing director level.

The problem is partly one of perception. While 86% of respondents in the Insead study (women and men), believe that gender discrimination is prevalent in the Asian workplace, only 40% believe that it is a reality in their own companies.

Experts say traditional views of women’s role in society often cause an ‘unconscious bias’ when it comes to allocation of roles.

“It’s about social conditioning, how society sees the role of women and how that spills over into the workplace,” explained Hari V Krishnan, CEO at PropertyGuru Group. He said this conditioning informs the attitudes of both male and female managers.

AsianInvestor is hosting an ESG Investment in Asia in Hong Kong on March 13. For more details, contact Terry Rayner via email or on (+852) 3175 1963.