Power and utilities companies failing to address gender imbalance
Monday 4th May 2015 - Power and Utilities companies are failing to take action on gender balance despite significant financial benefits being achieved by more diverse organisations according to EY’s Talent at the table: Women in Power and Utilities Index 2015.
The EY index reveals that companies that embrace diversity have an obvious advantage. With an average return on equity (ROE) of 8.5%, the global top 20 utilities for gender diversity significantly outperform the lower 20, whose average ROE is just 7%. Given the asset-heavy nature of this industry, a 1.5% ROE difference translates into a profit gap worth millions.
Globally, the total of female board members has dropped to 14% from 15% a year ago, while the number of female non-executive directors has decreased to 17% from 18% over the same period.
Julie Hood, EY Oceania Power and Utilities transactions leader, said the industry needs to gain a better understanding of the business case for putting in place diverse boards and senior management teams.
“This is a period of unprecedented change in the power and utilities sector, when the need for a diversity of ideas and opinions is more important than ever. We know that having more women on the board clearly links to better performing businesses,” Ms Hood said.
“It’s pretty simple, companies that are high achievers when it comes to diversity are making millions more in profit.
“The incentive is clear, so what is holding back the sector from acknowledging the problem?”
The star performer in Australia is Origin Energy who placed fifth on the index globally and first across Asia-Pacific.
“It’s great to see a company that talks the talk on diversity get the results that prove it’s also walking the walk,” Ms Hood said.
“Organisations that embrace gender diversity create a culture that the next generation of P&U leaders of all genders demand.”
As a region Asia-Pacific is performing poorly.
At 14%, Africa tops the list for the highest percentage of female P&U board executives — double the proportion of the next strongest performing region — Europe. The US and Canada sits in third place with only 5% female P&U board executives, largely reflecting the typical corporate board structure in the US where the CEO is often the only person to hold a position on the board as well as an operational position in the company. In Asia-Pacific, the percentage of female board executives is 3% and in Latin America and the Caribbean that number falls to zero.
In terms of women on senior management teams (SMTs), the US and Canada are in the top spot at 18%, followed by Latin America and the Caribbean at 17%. Europe and Asia-Pacific are broadly on par at 11% and 10% respectively. Africa and the Middle East have the lowest proportion of women on P&U SMTs at 7%.
“Companies in Australia are feeling the pressures of an industry that is transforming. The current environment features declining electricity demand, increased uptake of solar PV and the potential for significant policy changes impacting network tariffs, solar subsidies, carbon and emission management, and retail price regulation.
“When facing enormous change it is even more important that organisations provide men and women with the same opportunity to contribute and succeed,” Ms Hood said.
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