Parity and Diversity on Boards of Directors

Diversity and inclusion notions have come to the forefront in recent years, and the issues of board representation have extended well beyond gender.

Pressures on boards to display diversity are multiple. Some classes of institutional investors are outspoken in this regard, using their shareholder clout to demand change.

It is primarily on the premise that diversity avoids therisk of a decision-making process that is vitiated by too much homogeneity and complacency, that diversity is considered an essential feature of board composition.

The selection of new directors is predicated on the evaluation of multivariate criteria, and each nomination must be thought through by weighing its effects on the various dimensions of the board’s diversity, without neglecting the usual considerations.

This policy paper, which you can download from this link, considers various aspects of the concept of “diversity” and makes recommendations that we hope will make a useful contribution to the debate on this issue.