(Source: The Straits Times)

At the beginning of 2025, Hong Kong's capital market ushered in a landmark change. After a three-year transition period, the Hong Kong Exchanges and Clearing Limited (HKEX) has entered the strict enforcement phase of its Gender Diversity on Boards (commonly known as the “Women Directors Order”). This initiative not only marks Hong Kong's further convergence with international standards in corporate governance, but also highlights the Asian financial center's determination and boldness in promoting ESG development.

According to the HKEX's announcement, as of December 31, 2024, 97% of the approximately 2,650 listed companies in Hong Kong have completed the compliance requirements for gender diversity on their boards. Only 85 companies have yet to include female directors on their boards, most of which are temporary deviations and 15 are long-term suspended companies. Excluding exceptional circumstances, only 12 companies, or less than 1%, have never met the standard. This marks the end of the three-year transition period for the Women Directors Order, which was introduced in 2022, and has achieved significant results.

Among the companies that have met the standard, established financial institutions have shown exemplary performance. Hang Seng Bank leads the market with nine female directors, and its controlling shareholder, HSBC, also has more than half of its board of directors made up of women. The exemplary effect of these financial giants has set a benchmark for gender-diverse governance across the market. Meanwhile, the emerging property management sector is also showing positive trends, such as the leading percentage of women on the boards of directors of Link Services Group.

Over the past three years, Hong Kong listed companies have demonstrated a high level of acceptance of gender diversity in governance. Katherine Ng, Head of Listing at the HKEX, said that gender diversity is only the starting point for companies to move towards full diversity. This stance reflects the regulator's long-term strategy in promoting ESG development. By setting up a three-year transition period, it not only reflects the flexibility of the policy, but also leaves sufficient room for enterprises to make adjustments to ensure that the reform is carried out in a smooth and orderly manner.

Katherine Ng, Head of Listing, HKEX (Source: HKEX)

In the global ESG development process, gender diversity on boards has become an important symbol of corporate governance modernization. As Asia's leading international financial center, Hong Kong's full implementation of the Women Directors Order is not only a positive response to international governance standards, but also reflects our determination to promote the high-quality development of the capital market. With the in-depth implementation of the policy, gender diversity on boards will bring far-reaching positive impacts to enterprises.

Diversified governance improves decision-making quality

From the perspective of corporate governance, a diversified board composition can significantly improve the quality of decision-making. International experience has shown that gender-diverse boards tend to exhibit stronger risk awareness and a more comprehensive decision-making perspective. Female directors generally have unique insights in areas such as crisis management, talent development, and environmental protection, and can provide more inclusive solutions for corporate development. Leading companies around the world have demonstrated that a higher proportion of female directors is associated with stronger financial performance, greater innovation and better sustainability results.

Modeling effect reshapes corporate culture

Gender diversity on boards can have a positive demonstration effect in building organizational culture. Experience in developed markets such as the Nordics shows that gender balance at the board level can gradually influence the talent structure at all levels of the organization, leading to a more inclusive corporate culture. Such cultural change not only helps to eliminate gender discrimination in the workplace, but also helps companies gain an advantage in the global competition for talent. In recent years, a growing body of research has found that companies with diverse governance structures perform better in terms of talent attraction and retention.

Gender Diversity as a Key Investment Indicator

From the perspective of capital market development, gender diversity on boards has become an important indicator of concern for international investors. With the popularization of ESG investment concepts, major global asset management institutions have generally incorporated gender diversity into their investment screening criteria. Some leading index compilers have even launched specialized gender diversity indices to steer funds towards companies with more balanced governance. This policy push in Hong Kong will significantly enhance the attractiveness of locally listed companies in the international capital market.

(Source: Hong Kong Commercial Daily)

In addition, the advancement of gender diversity is also closely related to the United Nations Sustainable Development Goals (SDGs). Increasing women's participation at the top level of business is not only an important step towards gender equality, but also a key force in promoting sustainable development in society. Studies by some international organizations have found that increasing women's participation at the decision-making level leads to more social innovation and promotes enterprises to make more contributions in areas such as environmental protection and community development.

As the concept of gender diversity takes hold, companies are shifting from passive compliance to active change. This shift will not only enhance the sustainability of enterprises, but will also drive the entire capital market towards a more inclusive and balanced development. The successful practice of gender diversity governance in Hong Kong's capital market will provide useful reference for global ESG development and set a new benchmark for corporate governance reform in the Asia-Pacific region.

Editor's Note:

The high compliance rate of the HKEX's “Women Directors Order” reflects the Hong Kong capital market's firm commitment to the modernization of corporate governance. This policy is not only an institutional support for gender equality, but more importantly, it opens a new chapter in the diversity of corporate governance. From international experience, gender diversity on boards of directors often leads to a more comprehensive decision-making perspective and stronger risk management capabilities. Hong Kong's move follows the international trend and sets a benchmark for the Asia-Pacific region. It is expected that this reform will truly move from formal compliance to substantive change, bringing lasting governance dividends to enterprises and promoting the high-quality development of the capital market.