Better financial performance

More diverse and inclusive teams tend to generate better results which, in turn, can have a positive and significant impact on a business’s financial performance.

Companies with three or more female directors have been shown to significantly outperform those with less diverse boardrooms, according to an analysis of 12 years of data. (Gender diversity boosts the financial performance of firms, Glasgow Caledonian University, August 2020)

Another study shows that companies that have taken a holistic approach towards equal representation have outperformed their less diverse rivals by 3.1% per annum. (Why Gender Diversity Might Lead to Better Returns For Investors, Morgan Stanley, March 2021)

Reasons cited for this effect include increased employee satisfaction, an edge when recruiting talent and the ability to nurture and promote innovation.

Overall, full economic equality for women could boost global gross domestic product by $28trn by 2025, according to other estimates. (The Financial Impact of Diversity, Impax Asset Management, October 2020)

To conclude, the business case for greater gender diversity has never been stronger.

  • Greater diversity tends to generate a better financial performance
  • Firms with three or more female directors outperform less diverse rivals
  • Ability to promote innovation a reason behind improved performance
  • Full economic equality for women could boost global GDP by $28trn by 2025

‘Companies that are doing better on gender diversity tend to have better returns and a better performance – the two are interconnected’ – Anne Tolmunen, AXA investment manager, in FT Adviser.

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