EY Study: 82% of European investors consider boardroom gender diversity when investing

84% of European financial services investors state that the gender diversity of the boardroom has a significant influence on their decision to invest, compared to just 6% who say it does not influence their decision at all.

28% of Europe’s financial boards are yet to reach 40% female representation

82% of European financial services investors state that the gender diversity of the boardroom has a significant influence on their decision to invest, compared to just 6% who say it does not influence their decision at all.

Of board appointments made over the past year (July 2022 – June 2023), 44% were female candidates, representing an eight-percentage point fall year-on-year from 52% in the year to June 2022. Of board appointments made in the first six months of this year, 44% were female and 56% were male. Overall, the current gender split of European financial services board members stands at 43% female and 57% male.

Twenty-eight percent of listed European financial services firms have under 40% female representation in their boardroom, which is the level required by June 2026 to comply with the European Commission’s European Women on Boards Directive. The Directive requires all companies in EU member states to meet a 40% female target for non-executive boards or 33% for all board members.

On a sector basis, the gender diversity of wealth and asset management boardrooms lags the insurance and banking sectors. Almost half (47%) of wealth and asset management firms have under 40% female representation within the boardroom, compared to 24% of banks and 17% of insurance firms.

The EY Boardroom Monitor also provides clear evidence that women on boards continue to be less likely to have worked in c-suite roles. Across Europe’s financial boardrooms, just 53% of female board members hold or have held a C-suite position, relative to 65% of their male counterparts. This is up marginally on January 2023 data, which showed 51% of female board members had c-suite experience, relative to 62% of their male counterparts.

“The Romanian banking boardroom made progress in reaching the target of 33% female representation for all board members, as the gender split of the board of directors of the top 5 Romanian banks is 39% female and 61% male as of December 2022. However, the share of Romanian female candidates is below the EU share of 43%,” says Răzvan Pîrnac, Director, Financial Services Risk Management, EY Romania.

The age of board directors remains around 60 years old

84% of European financial services investors state that the age diversity of the boardroom has a significant influence on their decision to invest, compared to just 6% who say it does not influence their decision at all.

The average age across European financial services boardrooms is 59. For women, it is 58, up from 57 in January 2023, and for men, it is 61, up from 60 in January 2023. Overall, just 10% of companies monitored have board members under the age of 40.

Amongst the most senior board members – chairs and executive directors – the average number of positions held is two. Across all board members, sitting on more than one major financial services board is less common: only 3% of directors tracked hold two or more board roles at the largest European financial services firms.

When asked to identify the primary driver behind directors assuming multiple board positions, just over a quarter (26%) of investors cited board members’ desires to gain broader experience, and over a fifth (22%) cited remuneration. Separately 19% of investors believe it relates to a shortage of female candidates with sufficient experience; however, current EY Boardroom Monitor data does not support this, finding that the proportion of both men and women sitting on three or more boards correlates with the gender split of the total director population tracked.

From a sector perspective, directors holding multiple board positions are most common within the asset management sector, where 49% of board members hold more than two board positions. It is least common in the banking sector, where 39% of board members hold more than two board positions.

From a regulatory perspective, while there are local market limitations to some director roles, there is no blanket regulation applied across European financial services markets to restrict or mandate the number of board roles that can be held by an individual.

A ‘changing of the guard’ across Europe’s financial boardrooms?

In H1 2023, data from the EY Boardroom Monitor shows that boardroom exits constituted 10% of total boardroom members, with new appointments marginally lagging departures within the six-month snapshot*, at 6% of the total director population.

The banking sector had the greatest proportion of boardroom exits: 11% of board members at banks left their roles in H1 2023. In comparison, 9% of board members at asset management and insurance firms departed in the same period.

The average tenure of members departing financial services boardrooms during H1 2023 was 87 months, relative to 85 months across all boardroom members.

Against a backdrop of high recent board turnover, almost three-quarters of investors (74%) anticipate an increase in investor action during AGMs – whether voting against board members or proposing new board members – over the next five years to rectify any perceived lack of experience or diversity in specific areas.

Incoming board members increase C-suite, sustainability, and tech expertise

When assessing the collective skills, expertise, and experience of board members in the context of investing in European financial services firms, 87% of investors state that experience in both digital/tech and ESG/sustainability is valuable, and 83% state that C-suiteexperience is valuable. Professional experience indicates official qualifications or roles previously or currently held in the related field.

Of board members appointed in H1 2023, 25% have professional experience in sustainability/ESG, while 36% bring experience in tech, and 67% bring the experience of an executive position (outweighing the 64% with c-suite experience who departed their roles in H1 2023). This is a comprehensive year-on-year rise: of board members appointed in H1 2022, 20% had professional experience in sustainability, 22% had professional experience in tech, and 63% brought the experience in an executive position. For context, of the full EY Boardroom Monitor director population, just 14% of board members bring sustainability experience and 18% have tech experience.

European asset management firms lead on ESG hires but banks led on tech – H1 2023

Just over a fifth (21%) of Europe’s asset managers appointed board members with professional experience in sustainability/ESG in H1 2023, compared with 19% of banks and just 9% of insurers.

When it comes to tech expertise, 24% of European banks appointed board members with professional experience in tech in H1 2023, compared to 19% of asset managers and insurers during the same period.

Quick data overview as at June 30th 2023