More than 85 percent of the biggest companies listed on Gulf Co-operation Council (GCC) stock markets have no female representation on their boards, according to a new study by State Street Global Advisors.

The asset management company presented a paper in Dubai last week on enhancing gender diversity on company boards in the region, which stated that of 170 major listed companies surveyed, 147 (85.6 percent) did not have a single female board representative. It also found that only 5.06 percent of companies have any females represented within senior management teams.

State Street Global Advisors (SSGA) has been running a global campaign, known as Fearless Girl, which has targeted companies listed on stock markets in the United States, United Kingdom and Australia that have no female representation on the board, since 2017. The campaign, which was extended to Canada and Japan this year, has called on boards of 1,227 companies without a single female representative on board to appoint one, and has pledged - after a longer period of engagement - to vote against management teams at annual general meetings who fail to address this.

So far, SSGA said that 301 of the companies highlighted have taken action by appointing at least one female board member, while a further 28 have pledged to do so. Meanwhile, the company took voting action against 511 companies last year, and 581 companies in 2018, according to its Europe, Middle East and Africa head of asset stewardship, Robert Walker.

Walker told the event that the recent announcement by index compilers MSCI and FTSE Russell to include Saudi Arabian companies into its emerging market index next year presented "a great opportunity for us to look at this issue because we know that international investors, as they put capital into this market, will be looking at this”.

SSGA's 2017 Annual Stewardship report highlighted a 2015 study by MSCI which found that companies with a strong female leadership generated a return on equity of 10.1 percent per year, compared to just 7.4 percent for firms without a critical mass of women at the top of their organisations.

Walker also cited a McKinsey study which stated that if gender parity in workforce participation were reached in the GCC, it could boost GDP by 32 percent, adding $80 billion to the economy. The SSGA report also said that the rate of female labour market participation, at 30 percent, is well below the global average of 49 percent, even though 60 percent of the GCC's university graduates are female. 

Holding fire

Speaking to Zawya on the sidelines of the event, Walker said that SSGA had no plans to take voting action against companies in the GCC without female board members in the near future, adding that it had engaged with firms in other parts of the world for several years before doing so. However, he said that the fact that the companies it had surveyed were the 170 biggest on local stock markets meant they were the type of firms "that should be doing diversity" but weren't.

"So taking voting action at this stage doesn't make sense - we'd be voting against everybody." He added that as more international investors find part of their portfolios invested into GCC stocks, "there will be more pressure" on companies to improve gender diversity.

"At some point, yes, of course, we would think about whether we need to take voting action just as we've done in other markets, but I can't say when. What I can say is right now, we've launched this paper and we want to work with companies and regulators to achieve this," he said, referring to the Fearless Girl campaign's target of having at least one female representative on a company's board. “Voting action is the last resort."

In a panel debate at the event, Raeda Al Sarayreh, a steering member of the GCC chapter of 30% Club - a global campaign to boost female inclusion on boards and senior management teams - said that although the Middle East was "a different part of the world" with its own cultural and social norms, there was a need for better female representation across government and private sector bodies.

She hailed the recent decree by UAE President Sheikh Khalifa Bin Zayed Al Nahyan issued this month that 50 percent of the country's next Federal National Council parliament must comprise female representatives.

"Although sometimes quotas cannot work in favour of women, but to achieve significant change, and immediate change in culture and behaviours, you need them," Al Sarayreh said.

Ashraf Gamal El Din, CEO of Hawkamah, the Dubai-based Institute for Corporate Governance, argued that when it came to the talent required for filling board positions, "the pipeline is there".

"What we see in the Middle East is something very strange. You have lots of very successful businesswomen, very successful executives in the government and everywhere but not in the boardrooms," he said. "That's why we are calling for quotas."

SSGA's study found significant divergence between various GCC markets, with women more frequently represented on boards in Oman and Bahrain. In both countries, the percentage of companies with no female board directors was 60 percent, compared with 95 percent in Abu Dhabi and 96 percent in Saudi Arabia.

The average percentage of women on boards of companies was almost 7 percent for companies listed on Oman's stock exchange, but this fell to 0.5 percent for the Saudi stock market and 0.4 percent for the Abu Dhabi Securities Exchange.

(Reporting by Michael Fahy; Editing by Shane McGinley)

(Michael.fahy@refinitiv.com)

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