Breaking Boundaries: Women Poised for Milestone Achievement in Parity Amid Otherwise Bleak Outlook

Authors

Jennifer Laidlaw | S&P Global Sustainable1, Senior Writer

Daniel J. Sandberg, PhD, CFA | S&P Global Market Intelligence, Quantamental Research Managing Director

To achieve this estimate, the existing data on women’s representation rate in the study universe^[6] was fit to an exponential growth curve. The model can be extrapolated until the women’s representation rate reaches 50% (that is, parity with men). A more conservative model, whereby the rate of growth slows as representation approaches 50%, forecasts parity by 2037. This more conservative assumption estimates that exponential growth will continue in the near term but abate as women’s representation rate reaches an inflection point. In simple terms, companies that have been concentrating on achieving gender equality may deemphasize parity objectives as they realize progress.

Reality has closely followed model estimates, except during the COVID-19 lockdown in 2020. The error in the model forecasts is 0.4% on average over the last four years (2019-2022). The strong agreement of model projections with reality engenders confidence in the model. A notable exception was during the COVID-19 pandemic, when the actual representation of women in leadership positions grew by only 1.7%, versus the model expected growth of 2.5%. This data point is confirmatory of other observations that women’s careers were generally hit harder^[7],[8] by COVID-19 compared to their male counterparts.

2. Further Signs the US is Making Progress on the Gender Gap

According to the World Economic Forum’s (WEF) 2023 Global Gender Gap Report^[9], North America is the second most advanced region in terms of closing the gender gap, just behind Europe. The region also leads on closing the gender gap in the report’s economic participation index, where both the U.S. and Canada improved their scores. Parity in wage equality (for similar work) and estimated earned income had also increased in both countries, WEF found.

Policy actions and regulation may also accelerate the representation of women in overall leadership positions at U.S. companies. The Biden-Harris administration announced a national strategy on gender equity and equality in 2021.^[10] The strategy aims to achieve gender equality across society by, for example, promoting women’s economic opportunities and access to well-paying jobs and leadership roles.^[11] The administration has said it is also taking steps to address equal pay in all states and further support access to childcare for specific industries. Further, in 2020, the U.S. Securities and Exchange Commission (SEC) mandated^[12],[13] that publicly traded companies disclose certain details about their human capital resources that are material to their business, such as gender diversity. The SEC is scheduled to enhance human capital disclosure requirements^[14] in 2023, which could put pressure on companies to increase focus on diversity and provide additional transparency. The regulator has also made corporate board diversity^[15] an agenda item for 2023, with a potential rule that would enhance disclosures about the diversity of board members and nominees.

3. C-suite Diversity Lagging Board Diversity

Despite notable progress for women in U.S. leadership, the data also show that gender parity in the C-suite remains elusive. The same extrapolation methodology used in section 2 suggests collective C-suite parity may not occur until mid-21st century and parity at the highest levels in CEO and CFO positions could take even longer. The fact that parity in the C-suite may not be achieved before mid-century begs the question of whether companies, exchanges, regulators, and governments should be taking further action.

According to the S&P Global Corporate Sustainability Assessment^[16] (CSA), Europe is the region with the highest percentage of women in CEO roles, at 7.9%, reflecting legislative measures to ensure women’s participation in company decision-making. For example, France passed a law^[17]  in 2011 mandating a 40% representation of women on corporate boards. The percentage of women on the boards of France’s biggest publicly traded companies soared to 46% by 2021, up from 15% when the law was passed ten years prior.^[18]  Norway was the first country in the world to introduce binding gender quotas for corporate boards,^[19] while the U.K.’s voluntary approach to gender balance has produced encouraging results^[20]. Those measures have yet to filter through to the number of women in executive positions, suggesting that more is needed to reach parity in the C-suite. In North America, the representation of women CEOs is slightly less than that of Europe at 7%, according to S&P Global’s CSA data. While ahead of Asia Pacific, Africa and Latin America, companies in the U.S. and Europe still have far to go before women have parity.^[21]

4. Final Thoughts

Research has shown that a more diverse workforce can make a company more profitable. Diversity could also have an impact on the long-term value of the firm. A study^[22] by S&P Global published in 2019 showed that firms with a woman in the position of CFO were more profitable and generated excess profits of $1.8 trillion. Companies with a woman in the position of CEO or CFO produced superior stock price performance compared to the market average, while firms with more women on their boards were more profitable than firms with low gender diversity.

Women could achieve representation parity with men across senior leadership roles in the U.S. in less than a decade. While that possibility is encouraging, recognizing that parity in the C-suite may not occur until mid-century provides an opportunity for firms to give further support for women’s participation in the workplace. Companies can develop talent earlier in women’s careers and can implement strategies to ensure a steady flow of women in the talent pipeline. Data show such strategies make good business sense and have long-term benefits.

5. Appendix

The S&P Global Professionals dataset was the source for executive data. The dataset includes board and company affiliations, executive biographies, standardized job functions, titles, education, and compensation for more than 4.5 million professionals going back to 1992. Data are primarily sourced from Proxy Filings DEF-14A and amendments to 10-K filings, as well as other regulatory filings and press releases.

The S&P Global Corporate Sustainability Assessment (CSA) data is sourced from both publicly available information and company surveys that include over 1,000 datapoints and approximately 100 questions. Companies are scored on their responses and the scores are used as the basis for inclusion in the Dow Jones Sustainability Indices.

This study includes more than 86,000 executives from 7,300 firms over 12 years. At each year, all Russell 3000 Index constituent firms as of December 31 with relevant executive information were included. Exhibit 2 contains the count of distinct individuals for each role over the entire analysis period. Except where otherwise noted, analyses were run on the executives holding the positions below.

Gender^[23] determinations were made by three separate methods.

1. Included within the Professionals database is a field labeled ‘prefix’. When the prefix field was equal to ‘Mr.’, ‘Sir’, ‘Count’, ‘Father’, ‘Sheikh’, ‘Bishop’, ‘Lord’, ‘Hafiz’, ‘Baron’, or ‘Janab' then the executive was assumed to be a man. When the prefix field was equal to ‘Mrs.’, ‘Miss’, ‘Ms.’, ‘Sister’, ‘Lady’, ‘Madam’, ‘Countess’, ‘Baroness’, or ‘First Lady’ then the executive was assumed to be a woman. For all other prefixes (such as ‘Dr.’, ‘Professor’, ‘Lieutenant’, etc.) the gender was assigned ‘ambiguous’ for this method.
2. The biographies of each executive were parsed for the presence of gender related pronouns (“he”, “him”, “his”, “she”, “her”, “hers”). If a minimum of 90% of the pronouns in the biography were specific to one gender, that gender was assumed for the executive; otherwise, the gender was assigned ‘ambiguous’ for this method.
3. Data from the U.S. Social Security Administration were used to calculate the gender certainty associated with a first name and year of birth. For example, in 1975, 99.3% of babies named ‘John’ were male. If the gender certainty of an executive’s first name in the year the executive was born was greater than 90%, then the executive’s gender was assigned as such; otherwise the gender was assigned ‘ambiguous’ for this method.