News Analysis

European banks’ diversity record excels

by Dan Byrne on Jan 10, 2023

European banks’ diversity progress has seen a significant jump in the last six months – enough to put it ahead of future minimum targets for the first time, at least at the board level. 

The latest figures from EY indicate that, on average, the boardrooms of Europe’s financial services firms have already exceeded bloc-wide gender quotas – due to be enforced from 2026. 

An EY representative has praised the trend, saying that financial sector leaders were “driving change”.

What are the main takeaways from EY’s findings?

  1. The gender split in Europe’s financial services boardrooms is now 58% male and 42% female. This is up from 63% male and 37% female in June 2022. 
  2. New board appointments in 2022 were 50:50 between males and females, up from 42% in 2021. 
  3. Financial services boards are seeing an increase in personnel with sustainability experience. 
  4. This sustainability experience is most prevalent among female board members.

What’s the context?

There is currently no minimum requirement for underrepresented genders on boards in the EU yet. In the meantime, some countries like France already have gender quotas in place. 

According to a new EU gender balance directive passed last year, by 2026: 

  • 40% of all non-executive directorships must be held by women.
  • 33% of all listed-company board members must be women.
  • Member states must have a ‘comply or explain’ approach to enforce the directive, with appropriate penalties where necessary.

So financial firms are performing well?

Yes, and at a rapid pace, too, considering that the percentage of women on boards jumped 5% in just six months. 

Moreover, we can expect these figures to either repeat or increase again in the coming years, given the even split between males and females amongst new board appointees. 

“Progressive businesses are anticipating regulation,” said EY financial services managing partner Omar Ali. 

They “view diversity as a strategic priority, understanding that more diverse views, backgrounds and experience play a role in identifying and responding to risks, and ultimately create more effective boards”.

Is there value in what these financial firms are doing?

Yes. Even if you think of these trends as simply “moving with the social tide”; this, in itself, is enough to create long-term value.  

Putting the EU directive aside, we should recognise that investors also drive a strong appreciation for board diversity, and firms are keen to respond to it. 

Investors recognise the success of diverse boards. They know that such diversity gives boards unique, broadened vantage points. And they know that diverse boards more accurately reflect an organisation’s consumer base.

What else has EY said?

EY has found a surge in sustainability expertise on boards across the financial sector. 

For banks, the increase is moderate, with 43% of boards now having sustainability experience, up from 34% in June 2022. 

For wealth and asset management and insurance firms, the increase is far more noticeable:

  • W&AM sustainability experience has climbed to 32% from 11% in June 2022. 
  • Insurance sustainability experience has climbed to 17% from 4% in June 2022. 

Moreover, EY found that female directors are “far more likely” to have professional sustainability experience. 

Despite still being outnumbered in boards across Europe, women comprise 72% of the total board members with sustainability experience. 

“Board composition is fundamentally changing,” said Ali, “and companies are building out their sustainability expertise and increasing female representation.”

What does all this mean?

It means European financial boards are comfortable and confident in the direction they want their businesses to go. 

Are they reflecting more on government policy, investor sentiment, or their own long-term forecasts? Probably a mixture of all three. 

However, European banks’ diversity progress at this level is a standout. They are ahead of the curve in EU law, showcasing a unique strength in the coming years, especially as other sectors race to meet the same standards.

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