In today’s economy, both resource extraction and clean technology companies are essential players in driving economic growth and development. While resource companies have traditionally been seen as the backbone of the economy, clean technology companies are also increasingly becoming important players in the transition towards a more sustainable future. Regardless of which industry companies operate in, prioritizing diversity and inclusion in their workforces is critical for their success. By attracting and retaining a diverse range of talent, including underrepresented groups, companies can ensure they have the necessary skills and expertise to meet the needs of their stakeholders and succeed in an ever-changing industry. So, whether companies focus on mining, oil, and gas, or clean technology, making diversity and inclusion a priority is key to remaining competitive and sustainable in the long run.
Establishing diverse and inclusive teams can help companies build a culture of creativity and diversity of thought, which improves decision making and can drive innovation enabling them to navigate the evolving regulatory and social landscape. Doing so not only aligns with the values of their stakeholders but also drives better decision-making and improves overall performance. One key aspect of diversity that’s particularly important in the resources industry is gender representation.
Bedford Group Transearch publishes an annual in-depth report on Board and Executive Compensation across six sectors, including resource-specific sectors such as mining, oil & gas, as well as clean technology. These reports offer valuable industry-specific insights on diversity and evolving trends in corporate governance.
Insights from the most recent 2022 Report on Board & Executive Compensation in the Mining, Oil & Gas and Clean Technology industries indicate that while progress is being made across all three sectors, women remain underrepresented in leadership positions, both in terms of Board membership and C-suite executives.
Our reports indicate that the proportion of female Board members within all three industries has ranged between 13% to 24% with most recent statistics from 2021 showing a slight decrease in the mining sector and slight increase in the clean technology sector (see Figure 1). Bedford expects to see a steady increase in this number in the coming years with Nasdaq’s new Board Diversity Rule has been put in place (see below).
Figure 1. Graph illustrating trends in female representation on Boards in the Mining, Oil & Gas and Clean Tech Industries. Data compiled from Bedford Group Transearch’s Compensation Reports.
Here are some strategies and best practices for building a diverse and inclusive board:
- Set clear diversity and inclusion goals: Establishing specific goals for diversity and inclusion can help guide the board’s efforts and measure progress over time. The goals should be realistic and aligned with the company’s overall diversity and inclusion strategy.
- Identify gaps and develop a plan: Conduct a thorough assessment of the board’s current composition to identify any gaps in diversity and inclusion. Develop a plan to address those gaps, including identifying potential candidates and establishing a process for recruiting them.
- Expand the pool of candidates: To build a diverse and inclusive board, it’s important to expand the pool of potential candidates beyond the traditional networks. Consider working with executive search firms that specialize in diversity recruiting and outreach to underrepresented groups.
- Eliminate bias in the selection process: Bias can be a significant barrier to building a diverse and inclusive board. Develop a standardized selection process that eliminates unconscious bias and ensures that all candidates are evaluated based on their qualifications and potential contributions.
- Foster an inclusive board culture: Building a diverse and inclusive board is only the first step. To maximize the benefits of diversity, companies must also foster an inclusive board culture.
At the Board level, changes have already begun to address the need for increased representation. In August of 2021, the SEC approved Nasdaq’s Board Diversity Rule, a disclosure standard designed to encourage a minimum board diversity objective for companies. It also provides stakeholders with consistent, comparable disclosures concerning a com- pany’s current board composition.
Nasdaq’s Board Diversity Rule requires companies listed on the Nasdaq exchange to:
- Publicly disclose board-level diversity statistics using a standardized template; and
- Have or explain why they do not have at least two diverse directors.
The transition to this standard must occur over the course of the next four years. An “Initial Board Disclosure Matrix” is required to be in company proxies effective August 2022.
Companies will be required to have at least one diverse director (or provide an explanation for not having one) by 2023, and have two diverse directors (or provide an explanation) by 2025 or 2026.
Source: Board Diversity Matrix Disclosure Requirements and Examples. https://listingcenter.nasdaq.com/assets/Board%20Matrix%20Examples_Website.pdf
At Bedford we are committed to providing counsel and solutions that align to our own passion for diversity, equity and inclusion. We believe that diverse and inclusive leaders are critical to an organization’s success. We are conscious of the privilege and responsibility that accompanies the work we do to help our clients shape and transform their organizations which is why our commitment to inclusion, equity and diversity is fundamental to everything we do.
Bedford routinely conducts industry-specific surveys of compensation awards and practices and provides insights into management compensation. Our compensation reports are designed to provide our clients with sound, practical, and objective advice and guidance that ensures competitive pay practices while meeting the scrutiny of shareholders and other stakeholders.