A woman stands in leopard-print kitten-heel shoes in Florence, Italy. (Photographer: Chris Ratcliffe/Bloomberg)

Need Female Board Members? Chile's Government Has a List for You

(Bloomberg) -- Some corporate executives made such a fuss about not being able to find enough women to diversify their boardrooms that the Chilean government came up with a list of 136 candidates to help them out.

Maybe that sparked a little fire, because the annual round of shareholder meetings ended last month with four more women among the more than 250 directors in the benchmark IPSA index. It was pretty lean progress, though. Now 9% of people on boards at the 30 corporations are women, up from 7.8% last year.

“At this pace, we’ll need a Big Bang to get to where we should be,” said Luis Hernan Cubillos, a partner at the head-hunting firm Egon Zehnder International in Santiago.

Corporate Chile has to step up, he said, or face consequences. Men-heavy boards have “become an issue and it will probably have a cost for companies” as pension and private equity funds and other investors increasingly look at gender parity when deciding which stocks to hold.

Need Female Board Members? Chile's Government Has a List for You

Chile boasts better numbers than many in the region but activists and some in President Sebastian Pinera’s administration are frustrated that South America’s wealthiest nation hasn’t made more progress. It may be that advances in recent years created the impression the problem has been solved, said Carolina Cuevas, vice-minister at the Ministry of Women and Gender Equality. “There isn’t an awareness that Chile is behind the times.”

She underscored her point with a comparison to neighboring Peru, which in 2011 had zero female directors while in Chile the female-director statistic was 1%. “It’s been less than a decade,” she said, “and they’re now ahead of us,” at about 10%.

Government and industry efforts elsewhere have born fruit, with, for example, women’s representation on the boards of top companies in the U.K. reaching the highest level ever last year at 30%. A handful of countries, including Norway, Malaysia and India, have quotas. There are other approaches: In Singapore, a group called the Diversity Action Committee issues a biannual ranking to try to shame companies with few female directors.

The Chilean government has no plans to impose quotas, Cuevas said, but is working to double the number of potential female candidates on the Ministry of Women’s list. Two of those included on the one created this year were elected to boards, at Colbun SA and Inversiones La Construccion SA.

Cubillos said the government just might have to do more. “If there’s no significant change within the next two years, there will probably be a need for a legal mechanism that forces that change.”

All of Latin America is lagging. Women hold 23% of board seats in the U.S. and Canada and 29% of them in Western Europe.

Need Female Board Members? Chile's Government Has a List for You

Why is Chile slow to catch up? One answer might lie in how small the country is, with a population of about 18 million, and how intimate its corporate world. In fact, when women who belong to families with controlling stakes aren’t counted, female representation on boards drops to 5%, according to Cubillos.

“To be a board director you need to belong to certain circles, maybe even to certain families,” said Laura Albornoz, a law professor at Universidad de Chile and the only woman to sit on the board of state-owned Codelco, the world’s biggest copper miner, serving from 2014 to 2018.

And the culture remains hard to crack, she said, recalling how she was frequently mistaken for a secretary by her male colleagues and often had to endure mansplaining. She said she was very aware that she was an anomaly. “Boards don’t easily tolerate other ways to act.”

Need Female Board Members? Chile's Government Has a List for You

Her tenure ended after Pinera took office last year. His election manifesto included the promise of promoting a higher participation of women in high-ranking roles in the public and private sector. Still, Pinera appointed three men to the nine-member Codelco board.

Asked by reporters why the board was once again all male, Mining Minister Baldo Prokurica seemed to dodge. “We are fulfilling the commitment of appointing the best people to state-owned companies,” he said.

Most companies say they’re committed to changing the dynamics. But Rodolfo Krause, chairman of privately held steelmaker CAP SA, spoke volumes for skeptics when he answered questions from reporters last month about why all the director candidates offered to shareholders at the annual meeting were male.

“What’s the relevance of that? Our priority is to look for the best talents in the company, regardless of who they are. We view favorably the incorporation of women, but it will happen when it happens. To appoint a woman just because doesn’t seem reasonable.”

It does seem reasonable to many investors, including BlackRock Inc., which has called for companies to look for directors in more uncommon places, and State Street Corp., which has pledged to vote against members of nominating committees of those without women on their boards. Australia’s largest pension fund recently told companies in the Australian S&P/ASX 200 Index that if they fail to show progress in increasing the number of female directors to at least two, the fund will start voting against directors up for re-election.

This is an international trend because the changes can boost returns. Companies with the most even mixes of men and women posted profit margins 21% higher than those with little diversity, according to consulting firm McKinsey & Co. BlackRock’s research shows that more diverse boards get better results.

In the U.S., a new law in California requires public companies domiciled in the state to have at least one female director by 2019; those with more than five directors are supposed to have three women by 2021. New Jersey is debating a similar measure.

“It’s hard to understand how women, who make up half of the population and make 80 percent of purchase decisions in Chile, are not represented on company boards,” Cuevas said. “There has been progress, but it is clearly insufficient.”

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