[Analysis of Female Outside Directors] ① 'Bulletproof Glass Ceiling' in Finance and Industry Sectors

POSCO Zero Again This Year... Some Regional Banks and Card Companies Also Avoid
Survey of 77 Institutions Shows... 23% in Financial Sector, 27% in Corporates
Banks Most Passive, Securities Firms Similar
6 Out of 10 Are Former Professors

Editor's NoteDiversity and transparency have become key factors in corporate decision-making. Women's participation on boards of directors is a crucial indicator of diversity. Advanced European countries are increasingly mandating the implementation of gender quota systems. Research shows that securing gender diversity at the decision-making level enables effective oversight and enhances corporate value. The core idea is that a higher proportion of women on boards allows for a broader range of perspectives and independent decision-making, thereby increasing transparency. Norway was the first to introduce a gender quota for listed companies in 2006, requiring 40% of board members to be women. Within three years, the proportion of women rose to 40%. In 2011, the European Commission (EC) recommended increasing the share of women on boards to 40% by 2020, and when compliance was insufficient, it began enforcing this through legislation. Major European countries such as France, Italy, Austria, Belgium, Germany, and the Netherlands, as well as some U.S. states, have adopted similar measures. South Korea is also increasing the proportion of women on corporate boards in line with global trends. However, compared to advanced countries that have long debated and institutionalized women's participation on boards, the expansion of discussion and development of related systems in South Korea remain slow. What is the current status in South Korea?

The proportion of female outside directors in South Korea's financial and industrial sectors increased compared to last year, but there is still a long way to go.

Some regional banks such as Busan Bank, Daegu Bank, and Gwangju Bank, as well as Hyundai Card and Woori Card, did not appoint any female outside directors this year either. Among the top 30 companies by sales, POSCO also did not include any women on its board this year, continuing the trend from last year. Additionally, both the financial and industrial sectors showed a persistent concentration of female outside directors with academic backgrounds, accounting for about six out of ten.

On the 16th, Asia Economy conducted a full survey of 47 domestic financial companies and 77 companies among the top 30 by sales as of this March's shareholders' meetings. The proportion of female outside directors was 23.17% in the financial sector and 27.97% in corporations. Compared to last year, this represents an increase of about 2 percentage points in the financial sector and 6 percentage points in corporations.

Although the proportion of female outside directors in the financial and corporate sectors rose, the increase was generally not aggressive. In particular, the banking sector was the most passive, with only 9 out of 53 outside directors (16.98%) being women, and securities firms also fell short of reaching 20%.

Only nine companies had either gender-balanced outside director compositions or a high proportion of women: Jeju Bank, Samsung Fire & Marine Insurance, Hana Card, Kia, SK Energy, LG Chem, LG Display, LG Energy Solution, and Samsung SDI.

Diversity in career backgrounds and professions was also identified as a challenge to be addressed gradually. The persistent concentration of academic backgrounds highlights the urgent need for change in board composition. This year, the proportion of professors in both the financial and industrial sectors rose to 63%, up from 60% last year.

Lee Bok-sil, Chair of the ESG Committee at Lotte Card and former Vice Minister of Gender Equality and Family, stated, "Global standards consider a board diverse when at least 30% of its members are women. Especially in South Korea, there are almost no women among inside directors, and outside directors are appointed just to meet the minimum requirements under the Capital Markets Act, which is regrettable." Regarding the concentration of professors, she added, "Professors tend to be relatively free from conflicts of interest and have guaranteed expertise, which is why many have entered boards. However, since the board system was implemented in 1998, the male-centered pattern has persisted and is now being maintained among women as well, which needs to be reviewed."