Cooperation Council for the Arab States of the Gulf

Courtney Hodge, Associate
Paul Hastings (Washington, DC)

While the numbers are still low, the issue of diversity on corporate boards has received increasing attention in the Cooperation Council for the Arab States of the Gulf (“Gulf Cooperation Council” or “GCC”).1  However, according to a 2017 study conducted by the GCC Board Directors Institute (GCC BDI), like many other countries in the Middle East, the GCC countries view diversity through the lens of experience and independence.2  Some corporate governance codes in the GCC even attempt to address diversity in terms of “independent directors.”3  The GCC BDI report also found that only 10% of respondents stated that they would look to improve diversity through attracting female candidates.  However, as discussed below, there is a slow but growing focus on the inclusion of women in the boardroom and the workforce in the region.

Corporate Board Diversity Remains Low

Female representation on corporate boards is still low.  Across the region, women only make up 2% of board representation.4  Additionally, Saudi Arabia and the UAE are among the eleven countries where at least half of the corporate boards of listed companies do not have a woman board member or CEO.5  A look at board representation across several stock exchanges in the GCC further shows the lack of female representation.  For example, the Dubai Financial Markets has five women out of 383 total board seats, the Bahrain Bourse has six women board members out of 353 total seats, and the Tadawul exchange has one female board member out of 1,298 total seats.6
According to a 2015 McKinsey report, there are a number of barriers to women’s participation on corporate boards, many of which still exist.7  Specifically, within the region, intangible traditions and biases operate as “powerful constraints.”8  The GCC BDI study found that 48.1% of respondents identified culture and 44.2% of respondents listed a lack of qualified candidates as barriers to appointing women to boards.9  The struggle to find qualified female candidates is further exacerbated by the fact that traditionally women in the GCC did not work outside the home, and still today women tend to sacrifice their careers in order to raise a family.10  Finally, a Deloitte study, completed in conjunction with the 30% Club of the GCC, found that while many respondents felt that having women in the C-suite would be beneficial, most respondents did not think that increasing the number of women on boards was a priority.11

Reason for Optimism

Efforts by some GCC member governments have led to positive changes.  The UAE has made the greatest progress toward gender diversity in the corporate sphere by imposing a quota in 2012.  The quota requires every state-owned company to have least one female board member.  This is an especially noteworthy move because gender quotas generally are not popular in the Middle East.12  While the quota has been in place for a few years, it has not had a major impact on increasing female representation on corporate boards.  According to a 2017 Deloitte study, only 2.1% of board seats were occupied by women.13  The lack of impact may be partly a result of the fact that the 2012 quota did not include a target date or sanctions for non-compliance.14  The UAE has also enacted laws in order to regulate the pay gap in the workforce.15

The government of Saudi Arabia has also committed to improving female participation in the workforce.  Saudi law forbids gaps in pay between men and women.16  Additionally, the government is working toward increasing the percentage of women in the workforce from 22% to 30% by 2030.  Finally, in 2012 Saudi Arabia passed a law requiring 30 women to be present on the Shura council (the formal advisory body of Saudi Arabia), out of a total of 150 seats.17  Shortly after passing this law, the Saudi King appointed 30 women to the council for the first time in history.18  Female presence on the council has remained consistent since then, with women holding about 20% of the seats.19

Greater opportunities to increase women’s participation on corporate boards of directors also appear to be available among family-owned companies within the GCC.  Family-owned companies are central to the economies of GCC countries and are estimated to contribute approximately 80% of the GCC’s non-oil GDP.20  Commentators have observed that cultural changes and efforts to increase the participation of women in the labor force have motivated family-owned companies to rely on women relatives to take on more senior leadership roles.21  Those surveyed, however, have indicated that women who do take on senior leadership roles are primarily taking positions in human resources and marketing, which are viewed as having less impact on business operations.22
Associations that promote training, networking, and mentoring opportunities among businesswomen continue to gain momentum and effect change.  The major NGOs and civil organizations in the Gulf region include the GCC Chapter of the 30% Club, The Hawkamah, the Institute for Corporate Governance in the UAE, the Dubai Business Council, and the Reach Mentoring organization.

Conclusion

The move toward greater female representation in the boardroom has been slow in the GCC.  Cultural traditions and biases continue to create barriers to women entering and progressing in the workforce.  However, studies show that more businesses in the GCC are starting to acknowledge the benefits of having women on corporate boards.  Furthermore, the governments in Saudi Arabia and the UAE have implemented changes that will provide greater opportunities and equality to women in the workforce and political sphere.  Greater shifts in laws and cultural perceptions are essential to increasing the number of women in senior leadership positions in the GCC.

1 The GCC is an intergovernmental union consisting of countries located in the vicinity of the Persian Gulf.  The GCC member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (“UAE”).

2  Board effectiveness review: A decade of change in GCC boardrooms, GCC Bd. Dir. Inst. 28 (2017), http://gccbdi.org/Media/Survey%20Publications/GCC%2028077%20Survey%20Summary%202017%20English%20AW3.pdf.

3 Saeed Bin Shabib, White Paper: Diversity & The Boardroom The Case for Women in Regional (UAE) Boards, LinkedIn (Jan. 24, 2016), https://www.linkedin.com/pulse/white-paper-diversity-boardroom-case-women-regional-uae-bin-shabib.

4 Women in Finance: Beyond the Numbers, Middle East, ACCA (2017), http://www.accaglobal.com/content/dam/ACCA_National/me/News/wif-report-jan-2017.pdf.

5 GCC Bd. Dir. Inst., supra note 2, at 29.

6 Bin Shabib, supra note 3.

7 Tari Ellis, Chiara Marcati & Julia M. Sperling, Promoting gender diversity in the Gulf, McKinsey & Co. (Feb. 2015), http://www.mckinsey.com/insights/organization/promoting_gender_diversity_in_the_gulf.

8 Id.

9 GCC Bd. Dir. Inst., supra note 2, at 29.

10 Culture, Organizational Policies, Self-Imposed Barriers, and Gender Diversity in the UAE, Hawkamah, Inst. for Corporate Governance(2017), https://www.hawkamah.org/uploads/reports/Hawkamah%20-%20Gender%20Report.pdf.

11 View from the top: What business executives really think about women leaders in the GCC, Deloitte & 30% Club (2017), https://30percentclub.org/assets/uploads/Deloitte_and_30__Club_Study_-_View_from_the_top_(2).pdf.

12 Id.

13 Women in the boardroom: A global perspective, Deloitte (2017), https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Risk/Women%20in%20the%20boardroom%20a%20global%20perspective%20fifth%20edition.pdf.

14 Siri Terjesen & Ruth Sealy, Board Gender Quotas: Exploring Ethical Tensions From A Multi-Theoretical Perspective, Bus. Ethics Quarterly, 26(1), 23-65 (2016).

15 ACCA, supra note 4.

16  Id.

17 Deloitte, supra note 13.

18 Sara Hamdan, Women Appointed to Saudi Council for First Time, NY Times (Jan. 16, 2013), https://www.nytimes.com/2013/01/17/world/middleeast/women-appointed-to-saudi-council-for-first-time.html.

19 Fatmah Alotaibi, Roger Cutting & Julia Morgan, A Critical Analysis of the Literature in Women’s Leadership in Saudi Arabia, 3 Int’l J. of Bus. Admin. and Mgmt Res. 29, 35 (2017).

20 Leveraging an untapped talent pool: How to advance women’s role in GCC family businesses, strategy& 4 (2014), http://www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/leveraging-untapped-talent-pool.

21 Id. at 11.

22 Id.