The boards of power utilities lack gender diversity

Gender diversity in the boards of the corporate world, as a topic, is being widely researched. A body of literature has focussed on how gender diversity in the boards has a favourable impact on certain financial parameters of the company. By using high-end econometric models and tools of finance, scholars have proved how gender diversity in boards had a favourable impact on return on assets, return on equity and such other parameters.

Some papers have focussed on the relationship between corporate governance, corporate social responsibility and gender diversity and have found a positive association between the two. There are also papers that have discussed barriers to gender diversity. Some reports and papers from the countries where there are quota laws, criticise that some companies in these countries have just the minimum number of women directors, as prescribed by the legislation of their country. This they call this as, mere ‘tokenism’. Even sector-wise analyses have been done on this topic. And the energy sector is no exception. Research on gender diversity in the energy sector, both renewable and non-renewable, is growing, although still in a nascent stage.

Ernst and Young has developed an index called ‘Women in Power and Utilities Index’ which it publishes periodically. In the report published in 2015, the index tracked the number of women in the boardrooms of the world’s 200 largest utilities by revenue. The report mentions that the progress has been slow and the total percentage of women in the boards of all these companies altogether is only five per cent. One of the important findings of the paper is that, the top 20 most diverse utilities significantly outperformed the lower 20 in terms of return on equity.

Power sector

This article tries to analyse gender composition in the boards of power utilities in India, both in the public and private sectors in India. The Table shows the gender composition of power generation companies in both the public and private sectors. The companies mentioned in the Table are listed and important entities in power sector.

As is well known, the Companies Act 2013, made it mandatory for listed companies to have at least one woman director. As can be seen from the table, prior to 2013, when it was not mandatory to have women directors in boards, except NHPC and Power Grid, none of the power PSUs had women directors.

From 2013 onwards, in almost all the years, all the PSUs had at the most one or two women directors, who have been independent directors, or non-executive directors, or nominee directors. No PSU, except Power Grid, had women in the position of executive director, holding important posts of director finance, operations and such other positions, that have decision-making powers. Only Power Grid had one woman holding the post of director finance and director operations in the years 2019 and 2020, respectively.

NTPC, the largest power utility at present, doesn’t have a single women director. So is the case with NHPC. PFC didn’t have a woman director till 2017, even after it was made mandatory in 2013. REC did not have till 2016 and NEEPCO, even till 2019. This shows the power PSUs have not gone beyond ‘tokenism’. Needless to say, none of them had a woman CMD anytime so far.

Private sector

The case is no different in the private sector. Prior to 2013, none of the companies in the private sector, except Suzlon, had women directors. Tata Power, JSW Energy, Torrent Power, Adani Power, did not have women directors even till 2014, that is, even after it was made mandatory. Reliance Power did not have till 2015. In all other years, these companies had not more than two directors, except Torrent, which right now has three directors, of which, one is a non-executive director. So, even these companies did not have any women occupying the post of executive director, which again proves the ‘tokenism’ syndrome.

The state of the power sector is one of the parameters to judge the robustness of infrastructure of a country. India has completed three decades of reforms in the power sector. However, most of the goals envisaged by the reforms are still to be achieved.

At a time when the Indian power sector is saddled with the problem of stranded power plants, when the distribution sector is still deep in problems and when ambitious targets of renewable energy set by the sector are yet to be achieved, a gender imbalanced power sector does not augur well for the sector. There is a need for academic research to find out the barriers to gender diversity in power utilities in India, the way it has happened in other countries. Such research should give better insights to the policymakers.

Rajesh is Head, Centre for Energy Economics and Faculty, Economics, and Shweta is Member, Centre for Corporate Governance and Faculty, Finance, Institute of Public Enterprise, Hyderabad.

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