Almost half (47%) of Europe’s asset and wealth managers are yet to achieve boards made up of 40% women, despite this being the target required by the European Women on Boards Directive, according to the latest EY European Financial Services Boardroom Monitor.
The continent’s financial services firms have until January 2026 to raise the number of women on boards to at least 40%.
Of appointments made over the past year, 44% were women, eight percentage points down on the 52% hired in the year to June 2022.
See also: Women board members increase after diversity push
Overall, the current makeup of European financial services board members stands at 43% female and 57% male.
The report also found that women on boards remain less likely to have held c-suite roles in their career, with 53% having experience of senior leadership, compared with 65% of male board members.
EY Investors financial services managing partner Omar Ali said: “Against a volatile market backdrop and, at times, major pressures on the European banking sector, financial services boardrooms have visibly evolved in a short period.
“Director turnover in the first six months of this year has given space for chairs and executive teams to actively address any perceived skill or experience shortfalls in their boardrooms, ensuring new appointments add specific skillsets.
“Consensus from chairs we spoke to is that a mix of skills and more c-suite experience is crucial to cover all aspects of board activity, and it is encouraging to see this coming through in new appointments. Chairs are looking for new non-exec directors to have a strong understanding of the firm’s current performance in relation to the economic cycle and its operating environment.”
Focus on ESG hiring
On average, board members in European financial services hold three board positions, while 26% hold four.
An EY poll found 82% of investors believe ‘overboarding’ – sitting on three or more boards – could potentially hinder a director’s ability to govern effectively.
Meanwhile, 10% of European directors exited their roles in the first half of 2023.
Among the newly appointed board members, a greater focus has been placed on hiring directors with professional ESG experience.
Just over a fifth (21%) of Europe’s asset managers appointed board members with an ESG background in H1 2023, while 19% have experience in tech.
EY’s Ali added: “Financial services boardrooms have changed over the last few years, and chairs and executive teams have actively replaced departures with appointees who bring new and needed expertise – namely in sustainability and tech.
“As the dynamics of global business continue to change, we expect to see international experience and diversity of background rise in importance as boardrooms navigate an increasingly challenging macro backdrop, and the need for more female board members with c-suite experience remains a priority.
“However, such appointments can only take place if there is a strong talent pool and a growing pipeline offering an ever-wider range of candidates, both of which are crucial to avoid ‘overboarding’.”
This article first appeared on ESG Clarity’s sister title Portfolio Adviser.