Only 4 Female Inside Directors in Companies with Over 2 Trillion Won... Glass Ceiling Persists on Boards Despite Legal Revisions

Sustinbest Publishes Issue Report on Board Gender Diversity

[Asia Economy Reporter So-yeon Park] Since the revision of the Capital Markets Act, gender diversity on the boards of listed companies has shown a clear improvement trend. However, most companies have only one female executive director, and the majority of these women serve as outside directors rather than inside directors, indicating that the 'glass ceiling' on corporate boards in South Korea remains firmly in place.

On the 14th, ESG specialized evaluation agency Sustainvest published an issue report titled "Board Gender Diversity, the Next Keyword in Corporate Governance," which investigates the current status of board gender diversity domestically and overseas trends.

The report examined changes in the gender composition of boards among 1,339 KOSPI and KOSDAQ companies with total assets of 100 billion KRW (separate basis) or more, maintaining listed status from the end of December 2019, before the Capital Markets Act revision, to the end of March 2022.

The survey results showed that the overall proportion of female executive directors in companies with total assets of 2 trillion KRW or more (159 companies) increased from 3.0% to 12.8%. In contrast, companies with total assets under 2 trillion KRW, which are not subject to the Capital Markets Act revision, saw this ratio remain almost stagnant, rising only from 3.8% to 4.9%.

Among companies with total assets of 2 trillion KRW or more, the number of all-male boards sharply decreased from 129 at the end of December 2019 to 23 at the end of March 2022. It was found that 136 large companies appointed at least one female executive director.

However, considering the limitations of the revised regulations, which impose no sanctions on non-compliant companies and apply only to companies with total assets of 2 trillion KRW or more, it remains to be seen whether the appointment of female executive directors in domestic companies will continue to increase sharply after this year.

The report also pointed out that a shortage of female personnel with experience and expertise could slow the increase in female directors.

According to the report's findings, as of the end of March 2022, among 136 listed companies with total assets of 2 trillion KRW that appointed female executive directors, 116 (85.3%) had only one female director.

Of these 116 female directors, 110 were outside directors, 2 were other non-executive directors, and only 4 were inside directors. These four female inside directors are So-young Kim, Head of BIO ANH Division at CJ CheilJedang; Sang-min Lim, Executive Director at Daesang Corporation; Jung-eun Hyun, Chairwoman of Hyundai Group; and Boo-jin Lee, President of Hotel Shilla. Except for CJ CheilJedang, the sole female inside director on the boards of the other companies was a female member of the family of the corporate group’s head.

The report emphasized the need for companies to nurture and increase female employees. Although domestic large companies have mainly filled outside director positions with women to comply with the revised Capital Markets Act over the past two years, the report analyzed that for continuous improvement in board gender diversity, companies need to take a more fundamental approach internally through human resource development policies to increase the appointment of female inside directors.

Furthermore, the report pointed out that the proportion of female directors remains very low in listed companies with assets under 2 trillion KRW, which are not subject to the revised regulations, indicating significant room for improvement in board gender diversity. It mentioned the need for increased shareholder activism by institutional investors to achieve this.

Ryu Young-jae, CEO of Sustainvest, said, "Among ESG issues, gender diversity and equity in South Korea are particularly underdeveloped issues," adding, "We will continue to monitor and raise awareness of this issue to improve gender diversity on domestic corporate boards."

This content was produced with the assistance of AI translation services.