Having more women in executive roles at the UK’s top 350 companies could boost the economy by £58 billion, a study suggests.
Businesses are missing out on billions of pounds in profits because of a lack of gender diversity within their leadership teams, according to the stark findings of the annual Women Count 2022 report.
Three-quarters of executive committee members at FTSE 350 listed companies are men, and 96% of chief executives are men, the report found, revealing that there has been slow progress towards gender equality at Britain’s biggest firms.
This is cutting off the talent of half the population and costing businesses an average of £900 million in pre-tax profits as a result, according to the analysis.
The annual Women Count study by The Pipeline, which has run for seven years, delves into the annual reports and company websites of FTSE 350 companies.
Just 20 companies did not report on gender diversity this year and were excluded from the study.
It compares the profits of companies with male-led management to those with more women on their executive teams to work out how much additional income the former firms are missing out on.
The top three companies with the highest percentage of women on their executive committees are investment trust Law Debenture, retailer Dunelm and FTSE 100-listed firm Halma.
But there are 25 companies with no women on their executive committees at all, the report revealed.
Just 16% of profit and loss roles are held by women – referring to positions with direct responsibility for the profitability of a company and returns for shareholders.
There is “beyond doubt” a link between profit and diversity, the report argued.
Furthermore, it calculated that more balanced executive committees across the FTSE 350 companies could boost the UK’s gross domestic product (GDP) by 2.5%.
The authors of the study, former Labour MP Lorna Fitzsimons and Margaret McDonagh, argued that businesses facing a tough economic climate are being held back by inequality.
They said: “Today’s senior business leaders face unprecedented headwinds of economic turmoil, disruption to supply chains, rising commodity prices, and labour shortages.
“And yet we, as an economy, are wilfully missing out on a source of profitability, talent and innovation which is readily available within the system.
“To continue to systematically exclude women from senior management in top firms is an act of unbelievable folly.
“The tragedy is not just for individual women who are blocked from fulfilling their full potential. The real tragedy is that businesses are cutting themselves off from a pool of talent and innovation, and forgoing an additional 2.5% growth in GDP.
“It is now unarguable to state that businesses with diverse voices at the top, across gender, race and class backgrounds, do better.”