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Corporate Governance: Changes in the Boardroom


Good corporate governance is essential for sustainable private sector development because it helps firms attract and retain investors, better manage risks, reduce the cost of capital, improve performance, and better weather financial crises. Doing so also helps drive growth in national economies. 


 

Boards collectively, and directors individually, are central in implementing good governance practices. Ethical, diverse, and professional boards help companies respond to competitive challenges and build the conditions necessary for long-term success. 


 

A growing body of research shows a strong and positive association of a broad set of business benefits and gender-diverse boards. Among them: improved financial performance and shareholder value, increased customer and employee satisfaction, rising investor confidence, as well as greater market knowledge and positive reputation.  


 

Women at the top, many board members argue, often bring a different perspective that is essential for risk management and serve as important role models. The cause-and-effect direction is not clearly established. One might argue that well-run companies understand and leverage women’s contributions in pakistan leadership positions better, just as it could be said women in leadership positions bring diversity to decision-making and thus drive better management outcomes. Whatever the argument though, the evidence is clear—and it is surprising to see throughout the world that women are largely absent from corporate boardrooms. 


 

As part of IFC’s initiatives and programs promoting good corporate governance, we work towards raising awareness, building capacity, and expanding the discussion on board gender diversity, working with companies in developing countries to better leverage women on boards and to assist women leaders in these roles. 


 

For example, in Pakistan IFC commissioned a study of ender diversity on boards and organized a six-part series of roundtable discussions on the topic with female and male business leaders in Karachi, Lahore, and Islamabad. In addition, we conducted a workshop to assist senior women executives either to become stronger board members or grow qualified to join boards for the first time. We have now trained 122 Pakistani women for this important task. 


 

“It’s not about promoting equal opportunities,” says Arjumand Ahmed Shah of the Pakistan Institute of Corporate Governance. “This is about enhancing and improving corporate performance.” IFC has been advising her organization since 2006 with support from the Netherlands. 


 

For our part, IFC is actively looking to diversify the pool of potential directors to fill board positions in the companies we invest in. By 2015 we expect to fill at least 30 percent of IFC-nominated director positions with women, up from 15 percent today. The Global Corporate Governance Forum, an IFC multidonor trust fund facility that the World Bank and OECD cofounded in 1999, has now trained approximately 150 women corporate governance trainers around the world.


 

Related link: Telling Our Story


 

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