Women’s human rights continue to be restricted when it comes to equal access to leadership opportunities. Although there has been a global increase in women’s representation on corporate boardrooms, the number of women leading boardrooms across the globe still remains low. Pakistan remains significantly behind in providing gender representation and equal opportunity to women in the corporate board of directors. In 2021, the World Economic Forum (WEF) ranked Pakistan 153rd out of 156 countries on the index – making it one of the worst countries for gender parity. Although, the Securities and Exchange Commission of Pakistan (SECP) introduced a mandatory gender quota to increase the representation of women on the corporate boardrooms, it left significant gaps in its intended implementation by not issuing any guidelines to business in order to make a real difference. In this post, I will highlight the critical gaps in the current approach of the SECP towards gender representation and equal opportunity in the boardrooms and provide several suggestions to the government and to business in Pakistan to increase women’s actual participation and representation in light of the patriarchal nature of society in Pakistan.

In September 2019, the SECP issued the Listed Companies (Code of Corporate Governance) Regulations 2019 (2019 Code). Regulation no. 7 stipulates that ‘’… it is mandatory that the Board shall have at least one female director when it is reconstituted after the expiry of its current term.’’

As per Regulation 2(c) of the 2019 code, “Mandatory” regulations are construed to be strictly complied with by the company and non-compliance of the Regulations would lead to penal proceedings. The penalty for a breach of the Mandatory regulations are provided under Section 512(2) of the Companies Act 2017, which stipulates that the contravention, ‘’…shall be punishable with a penalty which may extend to five million rupees and, where the contravention is a continuing one, with a further penalty which may extend to one hundred thousand rupees for every day after the first during which such contravention continues.’’

This mandatory requirement on listed corporations can be termed as a ‘gender quota’ in order to ensure that at least one female is represented on the board of directors. The effects of the introduction of the gender quota were seen in 2020-2021. A survey conducted in 2020 revealed that only 11% of the companies listed at the Pakistan Stock Exchange have a female representative on their board of directors. Despite the imposition of penalties, many companies in Pakistan still remain in non-compliance. Those companies that do appoint female directors, do not appoint women on boards on the basis of merit. A report outlined that 55% companies considered family relationships to be the main criterion for women’s appointment to the board while only 3% considered that professional experience of women was the main criterion for their appointment. This restricts equal opportunity.

Although the SECP has introduced a mandatory gender quota, it has not directed the corporations to reveal their diversity and equal opportunity policies. In the absence of any policies, guidelines or recommendations, the use a gender quota is not driven by the concept of equal opportunity because women are not provided with the environment to compete equally for senior management positions. This situation can be contrasted with Denmark, who passed a quota law in 2012 but has taken a different approach, the “flexi-quota” adopted by the country allows companies to set their own targets and publicly disclose their policies to increase women board directors, and their progress against their targets. Pakistan can benefit from mandating disclosure policies on appointing women on senior management positions.

The use of gender quotas in order to rectify disproportionate gender representation on corporate boards has been controversial and debated. One criticism is supported by case studies from the ILO’s Bureau for Employers’ Activities, which come out strongly against quotas and highlight that the use of gender quotas result in the same discrimination that they aim to tackle, for example, where there is a gender quota, it is argued that women are selected solely because of their gender rather than their competence, merit or qualifications– which is already the case in Pakistan. A similar situation was seen in Norway, a 40% mandatory gender quota in 2002 resulted in companies seeing a 2.6% drop in company value as a result of hiring women with less management skills in order to comply with the law.

In Pakistan, patriarchal values are embedded in local traditions and culture, which predetermine the social value of gender. While men are seen in productive roles as breadwinners, women are seen in reproductive roles and as homemakers. For example, education of the male members of the family is prioritized over the female members. Additionally, the low representation of women in top positions in boardrooms across Pakistan is due to in-built corporate norms, practices of extremely long working hours and childcare burdens that fall on women. Therefore, very few women are able to enter into employment. In 2020, the labor force participation for females in Pakistan stood at only 22%.  A gender quota, without taking appropriate steps to introduce equal opportunity for females at all levels of the corporate ladder can result in the same small group of women getting appointed to various different boards or positions – termed “golden skirts” in Norway.

Women, being 50% of the population, bring diverse experience in viewpoints, ideas, opinions, life experiences and market insights, which enables better problem solving and ultimately leads to superior performance. It also results in a wider talent pool. Additionally, gender representation on the corporate boardrooms can improve corporate brand image and lead to a wider and diverse customer base. Gender diversity can also can boost teamwork and collaboration and result in more successful outcomes. Further, research has indicated that women’s income tend to correlate with greater expenditure on family welfare and children, (up to 90%) compared to men (38%).

However, many businesses fail to recognize the aforementioned positive impact a gender diverse workforce can have on an organization.

In order to increase the representation of women on the corporate board rooms and in leadership positions in general, the government should mandate businesses to create gender-neutral work policies, environment and hiring strategies. Further, the government must educate business on the benefits of gender representation and the SECP, rather than arbitrarily imposing mandatory gender quotas, should allow a ’comply or explain’ approach towards representation of women on the boardrooms. The SECP should mandate the disclosure of gender-diverse board practices in annual reports to enhance the transparency of diversity practices. In the long run, the government must tackle the barriers that prevent women and girls from attaining higher education and entering into employment.

Rida Tahir is a UK qualified Barrister-at-law and an Advocate of the High Courts of Pakistan.