SUMMARY
» Higher-rated companies have a higher proportion of women on boards in most regions. The correlation between credit quality and women on boards of directors is stronger in North America and Europe than in Latin America, the Middle East and Africa, and Asia-Pacific, according to our analysis of 3,000 Moody’s-rated companies. The presence of women on boards – and the potential diversity of opinion they bring – supports good corporate governance, which is positive for credit quality.

» Gender diversity on boards is increasing in North America and Europe. In North America, women occupy on average 28% of the boards of companies in our cohort, up from 26% in 2022. The percentage in Europe is 32%, up from 26% in the 2022. There were gains across most rating categories. New government mandates, pressure from large institutional investors and stricter disclosure requirements will continue to increase gender diversity in the boardroom. But parity is still far away.

» Service-oriented companies tend to have more diverse boards. Women occupy almost a third of board seats at companies in services and consumer sectors. This largely reflects the diversity of boards in North America and Europe, where most of the companies we analyzed in these sectors are based. In other regions, board-level diversity varies more by sector. Additionally, a relatively smaller percentage of women work in heavy industries globally than in service-oriented sectors, weighing on female board representation. Without a major push to increase female employment, the relative gap between women on boards in heavy industries versus service sectors is likely to remain wide.

» Board diversity factors into relative governance strength. Women account for an average of 31% of the boards of companies with positive governance characteristics, as indicated by the governance issuer profile scores we have assigned to those companies globally. The percentage is just 18% for companies with very highly negative exposure to governance considerations.