Diversity and Inclusion is a highly relevant topic not ‘just’ because it is all about equality and justice. But as long as entire parts of our global population remain disenfranchised, and desperate to just survive from day to day – be it in the US, the UK, sub-Saharan Africa, China or elsewhere – tackling challenges that affect all of us, indiscriminately, remains impossible.
Climate Change is a matter and challenge that does not discriminate – it affects all of us. But while discrimination prevails people will be forced to focus on surviving to the next day.
Discrimination is a real issue, and yet it barely makes headlines at the high spheres of the corporate worlds.
Until, like right now, with Germany having just legally enshrined in quote law for female senior executives and board director in all listed companies. This once more also put the spotlight on the Boards of Directors: their governance, their appointment processes, and their diversity – or rather lack thereof. And not just the absence of diverse gender representation. But rather the fairly common absence of ANY diversity.
Now, how does this reality look like in textile and fashion companies (research from 2019; Source)?
- A scant 4.8% of Fortune 500 CEOs are women.
- Only 12.5% of
apparel and retail apparel companies in the Fortune 1000 are led by
women.
Comparison:- Utilities: some 20%
- Aerospace & Defence: some 20%.
- Financial services: close to 18%
- Of 61 companies whose clothing lines are intended for women, 75% have predominantly male corporate teams.
And that’s before we look at either the fact that 78% of students at leading fashion schools are female, and that 73% at employees at stores are female also. The numbers are only slightly more promising in the board room: 26% of the members of board of directors are female.
The only good news in the above? We have the numbers.
The bad news? For the fashion and textile industry we do not even have numbers when it comes to any other facet of the ‘diversity and inclusion’ agenda. Race and ethnicities? Disabilities? LGTBQ+?
All we know it is not a rosy picture. But numbers? Very few, and very far between.
(Gucci being one of the few companies with some published numbers at least for the US).
The Tone From and At the Top
The question has been asked many many times: Why is that?
‘The Tone from the Top’ has been maybe THE most important aspect in the answer tenor.
But what means ‘Tone from the Top’? To get an idea, let’s have a look – by way of example – at the boards of directors of the following companies:
- GAP Inc
- H&M Hennes & Mauritz AB
- Inditex Industria de Diseño Textil SA
- Kering
- Levi Strauss Corp
- LVMH Moet Hennessy Louis Vuitton SE
- PVH Corp
- REI Co-op
- Target Corp
- VF Corp
Here the key take aways:
- Many of the above mentioned companies (at the very least GAP, H&M, Inditex, Kering, Levi Strauss, LVMH) are in fact companies whose shares are dominantly owned by a single family.
- It’s more: the key owners of said family shares are male, white, and in the 55+ to 70+ age bracket.
- All of the above boards of directors are predominantly white, predominantly male, and predominantly baby-boomers.
- Most boards consist of a single-tier, meaning: CEO/President = Chair of the Board. Governance wise that is NOT what is considered best practice. (More on that)
- For nearly all the directors on the above boards, it is unclear as to WHY they have been elected. i.e. which specific skill set, complementary to the skill set of their remaining board colleagues, has made them eligible to start with. There is no public source that would document that – and remember, these are publicly listed companies.
- Looking at the number of boards that some Independent directors are part of: above and beyond their seat on the fashion company: these numbers can go from 3 or 4 up to 10 or 12.
If we think now on what that means in a crisis year like 2020 was, the only conclusion is: many directors are ‘overboarded’.
In other words, they have too many duties to do a proper job as a director the when slightly more stressful times arise. 3,4 or maybe even 5 boards are a viable if tough work load in good times. Assuming the role is taken seriously. In bad times, like 2020 was, it is neigh impossible. - Looking at the TYPE of boards many of the directors are part of outside of their fashion board roles, raises the question – again – of their skillet. Appointments in the healthcare sector seems to be a dominant thread throughout for example. How come?
- And last but certainly not least: the boards do not seem to have any distinct skill set or identifiable knowledge as to sustainability. Hardly any of the boards (LVMH being an exception) have a subcommittee on sustainability (or Climate Change or whatever the its name could be), and which would signal the importance of the topic for a board of directors.
This is in fact in alignment with the insights from a recent survey: it shows that only 17% of Board of Directors serving on Sustainability committees have sustainability expertise. (Source, page 12).
Conclusion
In short: The Tone at the Top, on Boards of Directors specifically, is highly relevant to move the fashion industry towards a more diverse, inclusive and – fundamentally – future fit state.
Including, towards a more thorough and stringent Governance approach.
Huge family-owned stakes are a considerable risk. More so if these are all Western, and lead by ‘middle aged white men’.
Board seats that seem to be allocated predominantly based on contacts, network as well as willingness and availability, rather than on skillet and ability, do not bare well either for what the industry is about to face.
Diversity & Inclusion is the most urgent of these current and future challenges. But without getting a grip on this topic, looking at the even larger topics such as Climate Change is an impossible feat to start out with.
Learn more
- PWC Reporting: ‘Unravelling the fabric ceiling’
- Boardreport.org: ‘The Sustainability Board Report 2020’
