Q4 2022 Gender Diversity Index

Russell 3000 Boards Move Closer to Gender Parity

March 3, 2023

Amit Batish

The representation of women on corporate boards has remained a key area of focus for stakeholders over the last several years. In the age of societal awareness, corporate diversity is a top priority for companies, including at the highest level of an organization. As the world celebrates International Women's Day 2023, the latest edition of the Equilar Gender Diversity Index (GDI) shows that progress towards gender parity on Russelll 3000 boards remains steady, but slow. According to the Q4 2022 GDI, women now represent 28.4% of Russell 3000 board seats, up from 28.2% in Q3 2022. The GDI needle now sits at 0.57, where 1.0 represents gender parity.

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For years, experts have argued that the addition of women on boards provides a competitive edge. Diverse directors allow for diversification of views and ideas and bring often overlooked perspectives to the table. For example, retail companies who lack a female director may miss out on the perspective of those who control or influence over 80% of consumer spending. A diverse board may also lead to more robust management pipelines at companies that may lack diversity in its executive leadership.

"On International Women's Day, the saying 'women hold up half the sky' comes to mind," said Susan Angele, Senior Advisor, Board Governance at The KPMG Board Leadership Center. "Boards that actively recruit women as well as men are tapping into the broadest possible talent pool to find the skill sets and experience they need to guide their companies into the future. And the data shows numerous benefits correlated with gender diversity on boards, including more robust discussion, prudent risk-taking, innovation and a reduced likelihood of group-think."

While the prevalence of women on boards has increased by 6.4% from 26.7% at the end of 2021, progress has slowed following several quarters of acceleration. In fact, the 0.6% increase in female representation during Q4 2022 was the smallest quarter-over-quarter increase since Q3 2017 when representation declined by 1.2%—the only quarter in the history of the GDI that saw a decline from the previous quarter.

Another sign of the slowdown in progress is seen in the percentage of new directors who are women. During Q4 2022, 36% of directors added to Russell 3000 boards were women, down from 37.7% in the previous quarter. This marks the second consecutive quarter that this figure fell below 40%. Prior to Q3 2022, Russell 3000 boards saw eight consecutive quarters of at least 40% new women directors.

Many factors could be driving the decline in growth. For instance, several companies have expanded their definition of diversity to take into account race, ethnicity, sexual orientation and other variables beyond just gender. While it's certainly not the case that gender is being overlooked, the fact is that boards are looking to bring a variety of diverse perspectives to the table in addition to gender. Additionally, in California, a state judge struck down SB 826—legislation that required public boards in the state to have at least one female director—and deemed it constitutional in the past year, putting a major roadblock on diversity efforts at the largest state in the U.S. Meanwhile, Nasdaq's board diversity listing rules require each company on the exchange to have at least one woman on their boards, which most companies already meet.

Nevertheless, despite the recent slowdown, several achievements on the path to gender parity were uncovered in the latest GDI. During Q4 2022, the number of boards with zero women fell to 58 (2% of the Russell 3000)—down from 62 in Q3 2022. The expected year that gender parity will be achieved on Russell 3000 boards is now just eight years away in 2031, according to the current rate of growth.

"While progress on gender diversity moves slowly, it is heartening to see the estimate that boards will achieve gender parity by 2031," said Angele. "There is no shortage of talented, experienced women available to join boards and continue to raise the numbers."

The path to gender parity is indeed challenging and will present many obstacles along the way. However, the findings uncovered in the Q4 2022 GDI shed a positive light on the fact that while hurdles remain, it appears Russelll 3000 companies haven't lost sight of the importance of diversifying their boards.

About Equilar Gender Diversity Index

The Equilar GDI reflects changes on Russell 3000 boards on a quarterly basis as cited in 8-K filings to the SEC. Most indices that track information about board diversity do so annually or even less frequently, and typically with a smaller sample size, sometimes looking back more than a full year by the time the information is published. While this data is reliable and accurate, the Equilar GDI aims to capture the influence of the increasing calls for diversity from investors and other stakeholders in real time.

The Equilar GDI is powered by Equilar BoardEdge, a database of more than one million public company board members and executives. BoardEdge includes exclusive features that show how board members and companies are connected to each other, as well as the Equilar Diversity Network (EDN), a “registry of registries” of board-ready executives from leading ethnic and gender diversity partnerships, organizations, and publications.

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Amit Batish

Director of Content at Equilar

Amit Batish, Director of Content at Equilar, authored this post. Researchers Ryan Cody, Seth Mutenda, Evin Peterson, Forrest Rouleau, Leo Rubenstein, Kelly Stangl, Lexie Tang and Laura Wu contributed data and analysis. Please contact Amit Batish at abatish@equilar.com for more information about this article.

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