Women on Boards in Hong Kong 

With the HKEX deadline looming, what hope do Hong Kong companies have of achieving meaningful board diversity?  

Since 2009, Community Business has driven the conversation around board diversity in Hong Kong, publishing regular reports and hosting events to call out the slow progress on achieving parity. In December 2022, Community Business ceased reporting on the status of women on boards in Hong Kong after Hong Kong Exchanges and Clearing (HKEX) implemented a real-time reporting regime on gender. This was the result of the April 2021 consultation aimed at strengthening board diversity in Hong Kong. Visibility campaigns such as that of the 30% Club Hong Kong, supported in part by Community Business’ own reporting on the status of women’s board representation, helped to keep this important issue in the public consciousness and we were and are pleased to see action being taken at the regulatory level. Since then, HKEX has mandated all listed firms have at least one female board director by January 2025. This will create an estimated 800 positions among the 2500 companies listed in Hong Kong. While this imminent deadline and ambitious target may seem daunting, we at Community Business see the opportunity for companies in Hong Kong to embrace gender parity and diversity in a meaningful way.  

In recent years, Hong Kong has seen its status as a global economic player decline, with companies and individuals choosing to relocate elsewhere in the face of geopolitical turmoil, the fallout from the 2019 protest movement and a slow recovery from strict COVID-19 measures. Considering these challenges, as well as growing competition from other regional and global players, organisations in Hong Kong must up their game to ensure they can continue to compete on the world stage. There are several strong, evidence-based arguments to support diverse boardrooms as well as gender parity at the senior management level, including:  

• Futureproofing Your Business: In these testing and uncertain times, having a solid board is key to the success of your business. When both consumers and employers are struggling and with the global economy recovering from several shockwaves, it is important to lean on a variety of perspectives when making key business decisions. A successful board should mirror the consumer base its business is catering to and it is short-sighted not to include diverse perspectives at the decision-making level, particularly when women are such powerful consumers and drivers of market trends in today’s economic landscape. Broadening the spectrum of life and work experiences in the room when strategic decisions are being made ensures that blind spots or biases (unconscious or otherwise) are being addressed and overcome. In fact, there is a growing body of evidence to suggest that a diverse board improves both the economic and social performance of a business and there have been calls made by internationally recognised bodies such as the World Economic Forum to broaden opportunities for women in the workplace.  

While we at Community Business are proud champions of women taking their seat at the table, we do recognise that the sentiment of diversity at senior levels being good for business does extend to other minority groups and equally urge companies to ensure they are not discriminating or excluding qualified and valuable candidates based on race, religion, disability, sexual orientation or any other diversity marker.  

• Attracting and Retaining Top Talent: In today’s market, employees are empowered with a wealth of information about their potential employers: from salary review websites to inclusion indices or searing media reports. Now more than ever, potential employees are making work-based decisions based on factors wider than just salary. Notable particularly amongst people entering the workforce, but evident throughout all generations actively working (NB: see our recent Multigenerational Workforce publication for more information), candidates look for employers that reflect their own values and are making a positive contribution to society. It is vital that companies in Hong Kong position themselves as employers of choice for these decerning employees, to ensure they can attract and retain top talent. In today’s competitive market, high performing female candidates will vote with their feet if they see a glass ceiling at their organisation.  

Again, we at Community Business see gender equality in the workplace as a vital but initial step to achieving true workplace inclusion. Top talent that identifies as LGBT+, has both visible or invisible disabilities or belongs to any other minority group, has the potential to become a valuable employee contributing to the success of a business and will not remain loyal to organisations that they cannot see progression with.  

• Walking the Talk as a Responsible Employer: By leading the way and building a diverse board and senior management pipeline, businesses are setting the tone of inclusion from the top. This can help confirm their reputation as a responsible employer, something that employees, customers and increasingly investors look for as a differentiator in today’s crowded marketplace. It is shortsighted to overlook the power of robust ESG (environmental, social, governance) strategy in today’s climate, not to mention the commitment many organisations have made to the Sustainable Development Goals (SDGs). When addressing these commitments and the role that businesses play in them, it is important that equal weight is applied to all commitments and a thorough assessment of best practice is made. Often times, fiduciary responsibilities focus heavily on sustainability and leave social or governance best practice as an afterthought or a box ticking exercise. To build a truly responsible business and cultivate an engaged talent pool, equal weight should be placed at all of these pillars, even if that means returning to basics and assessing board make-up. When approached in a strategic and holistic way, these changes can contribute to a change in societal attitudes. Businesses hold great influence in the markets they operate in and by proudly championing diversity and inclusion they can forge a path for greater acceptance and equity in the wider community.  

What The Numbers Show Us  

Looking at the numbers today, we can see that progress in Hong Kong remains glacial. As of February 2024, the percentage of women on boards in Hang Seng Index companies stands at 18.9%. When Community Business last measured this (December 2022) it was at 17.1%. This is in stark contrast to other global markets, such as Australia, with its female board representation is sitting at 34.2% and the UK, at 40.2%. In Asia, the inevitable comparison between Hong Kong and Singapore leaves much to be desired for Hong Kong, with Singapore sitting at 31.4% female representation as of 2022.  

Female executive directorships - indicating a pipeline of female talent in an organisation and a good sign that the company is creating an environment for women to reach the top – paint a happier picture in the period that we have stopped reporting. In December 2022, at Community Business’ last analysis, the number was at 33.3%. We are happy to see this has increased to 39.8% as of February 2024, indicating some cultural shift in organisations in Hong Kong.  

Recommendations  

Given the stagnant landscape in Hong Kong with regard to board diversity and the looming deadline of January 2025, we urge organisations and individuals in Hong Kong to take action. One singular intervention will not be enough to make meaningful and systemic change. Instead, we recommend that addressing the lack of progress to include women on boards be holistic and strategic, including action from:  

Chairpersons and Nominating Committees 

• Develop an understanding of the business case  

• Drive a board renewal process and review the current composition of the board  

• Engage an executive search firm to widen the net 

• Foster a boardroom culture that allows diversity to flourish. Create an inclusive environment that considers the personal and professional commitments of candidates.  

• Embrace critical mass theory and avoid tokenism by appointing more than one female director, noting that at least three female directors is generally considered the tipping point for real cultural change and that a sole female representative may struggle to be heard or impact the dynamics of the boardroom 

Companies  

• Set the tone from the top with a strategic approach to gender diversity and a culture that is supportive of women and addresses entrenched bias. Drive accountability at the organisational level through goals, targets and benchmarking 

• Acknowledge the power of allyship. Engage male and non-binary allies as champions of change 

• Invest in your female talent pipeline. Offer opportunities for women to learn and grow with mentoring and training opportunities that are encouraged and monitored by management. Allow female leaders to serve on external boards to bolster their own credentials and ultimately widen the talent pool  

Women 

• Be an advocate and a role model for other women 

• Increase your visibility and take advantage of opportunities, including volunteering on an NGO or advisory board and making yourself available to executive search firms. Explore opportunities through TWF’s Women to Watch Series or other 30% Club activities.  

Ultimately, this dialogue is not new and businesses in Hong Kong have had ample warning and education on the need to improve board diversity. Time is now up for companies in Hong Kong with the HKEX deadline looming in January 2025. The question now is how will organisations in Hong Kong embrace this opportunity? There are two paths that they can take: the first, merely paying lip service to the idea of board diversity and planting a token woman on their board. Or the second option, embracing the winds of change using this as an opportunity to re-evaluate and build in gender equality measures throughout the business, future proofing and solidifying their position based on solid evidence and growing trends in this direction. At Community Business we remain hopeful that Hong Kong companies will embrace the latter path and we look forward to seeing how they will choose to navigate the coming months.  

To help companies and nominating committees navigate the HKEX deadline, Community Business has developed a bespoke training session, Board Diversity in Hong Kong: Building Equitable Boards. Get in touch to find out more or book your training today.