DealMakers - Q3 2023 (released November 2023)
Gender splendour: board gender diversity in South Africa
by Monica Griessel | PSG Capital
The publication of the inaugural King Report on Corporate Governance (King Code) in 1994 had, at the time, placed South Africa at the forefront of corporate governance globally. The issuing of a further three iterations (King IV, the latest) has, since then, strengthened South Africa’s reputation for corporate governance and sustainable reporting.
While King IV is not mandated by legislation, it has, since 2017, been integrated into the JSE Listings Requirements, with JSE-listed issuers (Issuers) required to adopt the King Code and comply with the mandatory corporate governance provisions in the JSE Listings Requirements (JSE LRs) (Integration). Several such provisions are gender diversity-related and include requiring Issuers to, inter alia:
have a policy on the promotion of broader diversity at board level, specifically focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience; and
disclose in their annual reports how the board of directors (board) or the nomination committee, as the case may be, has considered and applied the policy of broad diversity in the nomination and appointment of new directors.
In addition, the JSE LRs require Issuers who have established voluntary targets for race and gender representation at board level to report thereon.
With the Integration having been in effect for over six years, now may be an opportune time to ask whether it has assisted in promoting gender representation on Issuer boards.
To help answer the question, we look at (1) Business Engage Association NPC’s report titled, “2021 Status of Gender on JSE-Listed Boards: A 5 year review”  (Review Report), which included various comparisons between 2017 and 2021 for 159 Issuers (representing 50% of the Issuers); and Just Share NPC’s report titled, “Women in leadership: Assessing gender equality in the JSE Top 40”  (WIL Report), (collectively, the “Reports”). Below are a few notable findings –
In 2021, only 17 of the Issuers surveyed still had no female members on their board. The number of such Issuers has decreased significantly from the previous reports published, which is a positive trend.
In 2021 (five years after the Integration came into effect):
females represented 34% of non-executive directors, whilst in 2017, females represented 23%;
females represented 18% of board chairpersons, whilst in 2017, females represented 8%;
females represented 24% of lead independent directors, whilst in 2017, females represented 7%;
females represented 7% of chief executive officers/managing directors, whilst in 2017, females represented 3%; and
females represented 22% of chief financial officers, whilst in 2017, females represented 10%.
Women comprise 46% of the economically active population in South Africa, but hold, on average, 35% of board positions (180 of a combined 515 board members) and only 25% of executive roles (115 of a combined 468 senior executives) in the Top 40;
The fact that women are better represented at board level than in the C-suite reflects the lack of progress in ensuring that corporate culture supports the advancement of female employees;
Five of the chairpersons of the Top 40 company boards are women; and
Four of the Top 40 companies (10%) have female chief executive officers. 
It is evident from the Reports that there has been a noticeable uptick in the presence of women on Issuer boards from 2017 to 2021. This is indeed a positive trend, but there is still room for improvement for boards to enhance gender diversity. This may require more stringent regulatory requirements over time, and buy-in from Issuers themselves. The best solution is, however, always to be pro-active, rather than to wait for regulation.
Not only have we seen buy-in from regulators as it relates to gender diversity on boards, but also from other market participants, such as proxy advisers. According to PwC’s 2023 non-executive directors: practices and fees trends report, Institutional Shareholder Services have updated their South African voting guidelines for gender diversity recommendations, whereby one woman director on the board is the minimum requirement. Glass Lewis’ voting guidelines already state that they will consider voting against the nomination committee chairperson and/or its members if the company failed to adopt a gender diversity policy or targets and/or has no female board members.
Several articles and research papers have, over the years, been published claiming that diverse boards perform better financially, compared to their non-diverse peers. Regardless of such merits, it is clear that a diverse board brings with it an array of viewpoints, which helps ensure that existing norms and practices are consistently questioned and scrutinised via critical and strategic thinking, to ultimately help the company grow. Gender diversity is central to the diversity mix.
Griessel is Head: Sponsor Services | PSG Capital.
3 At the time of writing this article, Mary Vilakazi was appointed as CEO of FirstRand Limited effective 1 April 2024.