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Still too few women on Mexican boards

This week, to commemorate the International Women’s Day, I want to share an article I co-authored with Damian on gender equality in Mexican boards.

Still too few women on Mexican boards

Mexican boards remain unacceptably dominated by men, even if a few companies have made some decent progress over the past couple of years in reducing the gender disparity. Based on Miranda ESG’s analysis of the boards of the 35 companies in the BMV’s IPC Index, women held 10% of the board seats as of 2020, up from 8% in 2019, and 7% in 2018. In contrast, women make up 28% of board members in the S&P500, according to Spencer Stuart’s latest survey. Furthermore, looking just at women who are independent members of these boards, the female participation decreases to a mere 4% (vs. 3% in 2019 and 2% in 2018).

What is more surprising though is that a full ten of these 35 Mexican companies have no women on the board at all. These include some of the country’s most progressive and sophisticated companies (Grupo Alfa, Televisa, Grupo Mexico, Gruma, among others), including one of the five Mexican companies selected for Bloomberg’s gender equality index. This of course raises questions on the index methodology. By contrast, all 500 members of the S&P500 have at least one woman on the board.


Source: Company reports, Miranda ESG

With respect to new board members (those appointed in 2020), our survey shows a net increase of 7 women board members across the sample. This compares to a net decrease of 5 board members in total across the sample. This suggests some progress is being made. In particular, we would highlight Santander, which has gone from 0% female participation in 2018, to 36% in 2019, and 40% in 2020. IENOVA and GAP also showed material progress in 2020, moving from an 8% and 9% female participation in 2018, respectively, to 9% and 18% in 2019, and then 25% and 27% in 2020.  This led to GAP becoming tied with Walmex in 2nd place in a ranking of highest female participation (27% of the board members in Walmex are women now, decreasing from 30% in 2019).


But, why does gender diversity on a board matter?

It is not only about improving a company’s performance. Academic research is in fact inconclusive on whether a more diverse board on average improves a company’s performance. As Katherine Klein from the Wharton School concluded: “Rigorous, peer-reviewed studies suggest that companies do not perform better when they have women on the board. Nor do they perform worse. Depending on which meta-analysis you read, board gender diversity either has a very weak relationship with board performance or no relationship at all”.

Instead, for many (including us), the strongest argument for having women on the boards is that striving for a fair and reasonable gender balance throughout an organization, including the board, is a social obligation of a modern public company. It is difficult for boards to fully understand their stakeholders if they are cutting from the key corporate government body representatives of half the world’s population.

But even if controlling shareholders disagree on this point, there are two very practical reasons why it is in their own interest to aim for a reasonable gender balance on the board.

  1. Gender composition on a board is a key and very public, transparent ESG metric. As readers of our blog know well, pension funds, including those in Mexico, increasingly have mandates to invest in ESG-friendly companies, and avoid those that do poorly. Not having a reasonable number of women on your board is for sure going to affect your ability to attract some pension fund money over the long term. Reflecting this trend, Goldman Sachs has said it will not take US companies public unless have a diverse board, with a focus on women.
  2. Secondly, governments and regulators are beginning to focus on this issue. At the last count, Belgium, France, Germany, Iceland, India, Israel, Italy, Norway, Pakistan, and Spain currently have legislated quotas for women on corporate boards of publicly listed companies. In the US, California passed a state law in 2018 requiring publicly listed companies headquartered in their state to have a woman board member, although the constitutionality is being questioned. In Mexico, Congress is discussing similar regulations. There are two initiatives in Congress which if approved will force public companies to meet a certain quota of women on their board. Financial regulators and stock exchanges are also beginning to focus on this. As an example, Nasdaq has said it won’t list companies without at least one woman and one minority on the board.

In short, if you are going to be forced to do something in the future, which is probably the right thing to do anyway, it likely makes sense to do it now, in a voluntary and graceful manner. As every company in the S&P500 has done.

I hope you found this interesting. As usual, if there is anything we can help you with, please reach out.


Marimar and Damian

Miranda ESG

P.S. On methodology: For 2018 and 2019 our data comes from annual reports. For 2020, data comes from annual reports (when already available) or from the latest available data on company websites. As companies differ in when and how they report board changes, in some cases the changes over years may not always be strictly comparable between companies. We identify woman board members by their first name and, when available, additional gender information provided. This may not always be accurate. We exclude alternative directors. We have rounded up decimal points to the nearest integer. Our goal is to give us a rough indication of board composition, and this is not a rigorous academic study. Should anyone want to receive a copy of our data base of board members please email us and we will be happy to share. And if you detect any inaccuracies please let us know and we will correct them.


Appendix: More interesting data

Contacts at Miranda Partners

Damian Fraser
Miranda Partners

Marimar Torreblanca
Miranda ESG