The ASX-commissioned report prepared by KPMG is encouraging, showing an increase in the adoption of the Corporate Governance Council’s gender diversity recommendations in the second full reporting year and increasing numbers of entities articulating the business benefits of diversity. However, the results in relation to the setting and reporting of measurable objectives are not quite so positive. Listed entities should review their own practices and consider whether any improvements should be made to improve compliance with the gender diversity recommendations.
On 10 April 2014, ASX released an independent report conducted by KPMG ASX Corporate Governance Council Principles and Recommendations on Diversity (Report). The Report measures the adoption of the ASX Corporate Governance Council’s recommendations on gender diversity which are part of its Corporate Governance Principles and Recommendations (Diversity Recommendations) by 600 listed entities across 3 separate categories for financial years ended between 31 December 2012 and 31 December 2013 (the second full year of reporting on diversity). While the Diversity Recommendations are not mandatory, listed entities must disclose in their annual reports the extent to which they have followed them and if they have not followed all of them, must explain why.
In summary, the Report makes a number of findings, including that:
- there has been increased adoption of the Diversity Recommendations and increasing numbers of entities articulated the business benefits of diversity;
- an entity’s size measured by market capitalisation (and not entity sector) is a key indicator for establishing a diversity policy. Adoption of a policy increased in top and bottom sample groups and remained stable in the middle sample group;
- setting of measurable objectives did not increase significantly across the sample group (with size being a key indicator of whether measurable objectives have been established) and the quality of measurable objectives (where set) was variable;
- increased numbers of entities provided a definition of “senior executive” and many entities gave highly detailed breakdowns of women in leadership roles but many entities disclosed little detail on the categories of management reported; and
- size and stage development was still the main reason given in ‘if not why not reporting’, followed by entities being in the process of rolling out diversity measures.
The Council’s third edition of the Corporate Governance Principles and Recommendations released on 27 March 2014 provide further guidance on the meaning of measurable objectives, require listed entities to define “senior executive” and allow those entities required to report under the Workplace Gender Equality Act 2012 to report their Gender Equality Indicators in place of the statistics set out in the Diversity Recommendations (see G+T Client Alert on 31 March 2014 for further details). Reporting against the third edition commences for financial years ended on or after 1 July 2014.
See the media release dated 10 April 2014.