Gender diversity in AIM company boards

Bernadette Young, Co-founder & Director, Indigo Independent Governance Ltd

A report published by corporate governance experts, Indigo: Independent Governance in collaboration with ESG-data specialist, Addidat, has highlighted the woeful lack of gender diversity on AIM listed boards. The report, a follow-up to a similar review from last year, tracks the slow rate of progress to increase the proportion of women appointed to smaller listed company boards.

Gender Diversity in AIM Company Boards: Progress Update March 2024, shows just how far behind the curve these smaller UK listed businesses are in contrast to the more impressive progress being made in the boardrooms of the FTSE 350 and the UK’s largest private companies. Whereas an average FTSE 350 company board comprises 42.1% women, only 8% of AIM companies have boards where 40% or more of their directors are women.

The progress made by these larger listed companies masks, to some extent, the reality in many smaller cap company boardrooms, with less than one in six AIM board roles currently occupied by a woman. Across all AIM companies, 37% still have no women appointed. While this is a reduction on the figure of 42% reported in 2023, with more than a third of AIM boards still being a male-only affair, there remains much room for improvement.

Beyond the worst offenders who have yet to appoint any women, 26% of AIM firms only have a sole female director, despite the evidence that the full benefits of greater gender diversity are not really delivered until there is more than one woman director in the room.

Where there are two or more women directors, the change of culture, tone and influence is much more evident and the delivery of the greater commercial success which is linked to increased diversity is therefore more likely to be achieved. A lone female voice may find it difficult to be heard.

Not all AIM companies have poor records on director diversity. 5% of AIM companies, for example, have two or more women occupying the most senior roles – chief executive, chief financial officer, chair or senior independent director. And 22% of such companies have one woman in a senior role.

Looking through a different lens

Drilling down into the data to identify how many companies have women in the senior roles is just one way in which a more granular and accurate view of the current state of affairs can be created.

Additionally, the report looked at differences in board gender diversity between sectors and market capitalisations. Sadly, the real estate sector has gone backwards over the last year, with the proportion of women on boards averaging at just 4%, even lower than the already poor 8% reported last year.

The report also links lower boardroom gender diversity as the size of the company’s market capitalisation reduces. For companies valued at less than £10 million, only 10% of directors are women.

The lack of women directors on AIM company boards is a stark reminder of the extent of the action needed to drive real diversity into the leadership of such businesses. The QCA Corporate Governance Code encourages boards to look at wider diversity factors, for example, socio-economic backgrounds, nationality, educational attainment and age. When some companies have not yet started to address even gender diversity on their boards, it is questionable whether they will embrace the full gambit of diversity factors and recognise the advantages that greater diversity can deliver.

The role of the governance professional

As advocates of effective governance, Chartered governance professionals have a privileged position of influence. It is a profession with a proud track record of successful women reaching the highest levels within business, including a place at the board table. With their efforts and with the support of male colleagues, let’s hope next year’s report can present a more favourable position.

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