How Inclusive is Corporate Malaysia?

The above title is from Shireen Muhiudeen (“Shireen”) in an FMT article, which focused on Corporate Malaysia.

The Parker Review Report released early 2022, marked five years since the publication of the first “Report into the Ethnic Diversity of UK Boards” in 2017 by Sir John Parker and the Parker Review Steering Committee.

The update in 2022 reviewed the metrics and the results of the target set in 2017 – that each FTSE 100 board should have at least one director from a minority ethnic group by the end of 2021.

Source: The Star, 10/9/22

A review of the FBM 100 in Malaysia, as well as the KLCI was done by Shireen to see how Corporate Malaysia is getting on in achieving our diversity targets, especially in the area of gender diversity.

Women on boards did improve the performance of companies. Ten years later, the subject is on whether Corporate Malaysia is indeed serious about gender diversity, as well as inclusivity.

The results are interesting. For FBM 100 companies:

• There were 903 directors in the top 100. This gives you an indication of the size per board.

• 73.5% of the directors are men and 26.5% are women, which still puts us shy of the 30% goal.

• Of the 100 chairs, 97% are men, which means only 3% are women.

• 58 out of the 100 companies do not meet the 30% target of women directors on their board; while 42 met the target.

If, we examine at the FBM KLCI companies:

• There were 304 directors in the FBM KLCI companies. This gives you an indication of size per board in these 30 companies.

• 70.7% of the total directors are men, while 29.3% are women. This means they have reached the 30% target for the FBM KLCI companies in terms of gender diversity.

• Of the 30 chairs, 96.7% are men and 3.3% women.

• 18 out of the 30 companies met the 30% target of gender diversity, while 12 companies did not.

As the world is moving from gender diversity to Diversity, Equity and Inclusion (DEI), a review the FBM 100 and the FBM KLCI 30 in terms of inclusivity was also done.

With the FBM 100 companies, it was found:

• Ethnic minorities in the community comprised 46.9% of the boards, while other ethnic groups made up 4.6%.

• The small representation of women chairs was from the ethnic majority.

• Women independent directors represented 74.5%, with the balance as non-independent directors.

With the FBM KLCI 30 companies, it was noted that:

• Ethnic minorities in the community comprised 43.8% of the boards, while other ethnic groups made up 9.0%.

• The single woman chair was from the ethnic majority.

• Women independent directors represented 84%, while 15.7% were non-independent directors.

There are some companies that need to reconsider their board composition when they embark on their next exercise to refresh board members. There is also a clear absence of women leading Corporate Malaysia boards.

However, the research does not examine management and employees inclusivity in these companies. And if you review GLCs and GLICs it is probably very skewed. That goes for the civil service and most areas of the government. This is where the new government has to address as much as the private sector. It is when the public sector action and policies are inclusive, will others try to follow. We can incentivise that with tax breaks or exemptions but we must desire to have diversity and inclusivity!

Reference:

How inclusive is corporate Malaysia? Shireen Muhiudeen, FMT, June 14, 2022