[Analysis of Female Outside Directors] ④ Lee Boksil, Former Vice Minister of Gender Equality and Family, "Board Diversity Must Be Practiced for Overseas Business"

Lee Bok-sil, Chair of the ESG Committee at Lotte Card (former Vice Minister of the Ministry of Gender Equality and Family), emphasized that "at least 30% of board members should be women."

On the 16th, Lee told Asia Economy, "The global standard is that at least 30% of board members should be women to ensure diversity," adding, "However, in Korea, there are almost no female inside directors, and even outside directors are appointed just one by one to meet the requirements under the Capital Market Act, which is regrettable."

The amended Capital Market Act, which has been in effect since August 2022, stipulates that listed companies with assets exceeding 2 trillion won cannot compose their boards solely of one gender. Since then, there has been a trend to increase the number of female outside directors, but limitations remain clear, such as appointing only one female director regardless of board size and the continued lack of female inside directors.

Former Vice Minister of Gender Equality and Family Lee Boksil is being interviewed by Asia Economy at the Four Seasons Hotel in Jung-gu, Seoul. Photo by Jo Yongjun jun21@

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Regarding the absence of penalty provisions in the amended Capital Market Act, Lee said, "During the National Assembly discussions, many lawmakers were most concerned about the excessive burden on companies," adding, "Therefore, the regulation targets companies with assets over 2 trillion won, not all listed companies, and a two-year grace period was given to foster a voluntary culture." She continued, "Since the Capital Market Act itself is a regulatory law, the absence of penalty provisions does not mean 'it's okay to violate it,'" and added, "If violated, it would damage the company's reputation, so even without penalties, companies will comply."

Lee stated, "Appointing female outside directors is not just a matter of gender equality but is necessary because it benefits companies' global business," and added, "Diversity is a trend within global ESG (Environmental, Social, and Governance) and has become a worldwide trend." She emphasized, "Companies seeking overseas investment or aiming to be listed on Nasdaq must have board diversity and expertise."

She predicted that within the next 10 years, companies will fill 30% of their boards with women. Lee said, "Until a few years ago, ESG was not a social issue in Korea, but in the past 2-3 years, there has been an ESG boom," adding, "Once the perception that ESG, including board diversity, contributes to sustainable corporate growth is internalized, it will not take even 10 years."

Lee viewed the concentration of female outside directors mainly in academia as a problem inherent to outside directors themselves. She explained, "The concentration of professors is not a problem of female outside directors but rather a perspective on how boards are operated," adding, "When external experts come in, conflicts of interest are considered, so professors with guaranteed expertise have been appointed frequently regardless." She pointed out, "The board system was established in 1998 and has been maintained for 25 years, but the pattern of male-centered boards has been maintained equally for women, which needs to be reviewed."

She criticized the reluctance of public enterprises compared to private companies in hiring female executives. Lee said, "When pushing for the amendment of the Capital Market Act, public enterprises argued that guidelines and evaluation factors had already been reflected, so the law was unnecessary," adding, "A system should be established to monitor the selection process and ratio of female executives in public institutions as well."

Lee stressed that expanding female outside directors alone is not enough. She said, "There must be an increase in female inside directors and female CEOs, and mechanisms to prevent career interruptions should be created," raising her voice, "Furthermore, we need to move toward creating a long-term policy platform." She added, "Since the Capital Market Act was created under the leadership of the World Women Directors (WCD), a non-profit NGO, now the government must step in," and said, "I hope the 22nd National Assembly will remove the prefix 'targeting companies with assets over 2 trillion won' from the law."

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