Inclusive leadership: progress, but not fast enough – OMFIF

Report on Gender Balance in the Financial Sector and Alignment with Sustainable Development Goals

Introduction: A Critical Juncture for SDG 5

The global financial sector is facing a significant challenge in translating gender balance intentions into measurable outcomes, a critical step for the achievement of Sustainable Development Goal 5 (Gender Equality). Analysis from the OMFIF Gender Balance Index (GBI) indicates that the sector must accelerate action to bridge the gap between policy and practice. This report assesses the current state of gender representation, its implications for the Sustainable Development Goals (SDGs), and evaluates a strategic intervention designed to foster inclusive leadership.

Current State of Gender Representation: A Barrier to SDG 5 and SDG 8

Global Gender Balance Index (GBI) Findings

Data from a survey of 335 global institutions reveals a significant deficit in gender parity, directly impacting SDG 5.5, which calls for women’s full participation and equal opportunities for leadership.

• The average GBI score is 42 out of a possible 100, indicating the sector is less than halfway to achieving gender parity in leadership.
• Only 16% of institutions are led by women.
• Women hold just 27% of C-suite or deputy governor positions, which are critical pipelines for top leadership roles.
• Representation in senior roles has stagnated at 30% since 2021.

Progress and Persistent Gaps

While some progress is noted, significant regional and functional disparities remain, hindering uniform progress towards SDG 10 (Reduced Inequalities).

1. Positive Developments: For the first time, three institutions achieved a perfect gender balance score. The overall share of female leaders reached a record high of 16%.
2. Negative Trends: New appointments of female governors fell to 12%, a three-year low. Regional gaps persist, with North America and Europe outperforming the Asia Pacific and the Middle East. Women remain underrepresented in decision-making and revenue-generating roles.

Economic Implications for SDG 8

The gender gap in leadership is not only an equity issue but also a performance issue, with direct consequences for SDG 8 (Decent Work and Economic Growth). Global analysis confirms a strong correlation between gender diversity and financial outperformance. Companies in the top quartile for gender diversity on executive teams are 39% more likely to achieve above-average profitability, reinforcing the economic case for gender equality.

Addressing Systemic Challenges: Building Pathways to Achieve SDG 5.5

The “Broken Rung” Phenomenon

The primary bottleneck to achieving gender parity is not at the highest level but in the pathways leading to it. A “broken rung” phenomenon is observed where high-potential women stall before entering senior decision-making tracks. This is exacerbated by the clustering of women in enabling functions rather than core policy-shaping or profit-and-loss roles, limiting the pipeline to executive leadership as envisioned in SDG 5.5.

Strategic Levers for Systemic Change

To address this structural barrier, institutions must adopt a multi-faceted approach focused on creating clear and equitable pathways to leadership.

• Implement transparent criteria for promotions to mitigate bias.
• Institute deliberate cross-functional rotations to provide women with exposure to core business areas.
• Establish formal sponsorship programmes to champion high-potential women.
• Invest in building the leadership and policy capacity of women regulators and policy-makers.

A Case Study in Action: The Leadership Development for Regulators (LDR) Programme

Programme Design and Contribution to SDG 17

The Women’s World Banking’s Leadership Development for Regulators (LDR) programme offers a scalable model for accelerating progress on the SDGs. It directly addresses the need for skilled female leadership in financial regulation by equipping senior and high-potential women from emerging markets with skills to advance women’s financial inclusion. The programme’s dual-participant model, which pairs a senior official with a high-potential woman leader, exemplifies SDG 17 (Partnerships for the Goals) by creating top-down sponsorship and fostering institutional reform. This partnership-based approach links individual leadership development to systemic change.

Measurable Impact on SDG 5 and SDG 10

The LDR programme has demonstrated significant, measurable outcomes that contribute directly to SDG 5 and SDG 10.

• Reach: The programme has engaged over 360 participants from 75 institutions across 49 countries, whose institutions regulate financial systems serving approximately two-thirds of the world’s unbanked women.
• Policy Implementation: 84% of participants report taking concrete steps to implement policy action plans, and one-third of participating institutions have implemented at least one policy designed through the programme.
• Career Advancement: Over 63% of the emerging women leaders have achieved a promotion or expanded their scope of responsibility, strengthening the leadership pipeline.
• Top-Level Impact: Two alumnae now serve as central bank governors, demonstrating the programme’s effectiveness in creating pathways to the highest levels of leadership.

Conclusion: Scaling Solutions for SDG Achievement

The persistent gender gap in the financial sector requires a shift from intention to structured, evidence-based action. The primary challenge is not a shortage of female talent but a systemic shortage of pathways to leadership. Models like the LDR programme demonstrate that targeted investment in women’s leadership capacity yields measurable returns for individuals, institutions, and the financial systems they regulate. By bridging leadership development with gender-inclusive policy design, such initiatives create a virtuous cycle that advances SDG 5, SDG 8, and SDG 10. To achieve the 2030 Agenda, the financial sector must scale these proven models to transform inclusive intention into systemic and sustainable change.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

   • SDG 5: Gender Equality

     This is the primary SDG addressed. The article’s central theme is the lack of gender balance in leadership positions within the global financial sector. It directly discusses the underrepresentation of women in decision-making roles, such as governors and C-suite executives, and the need for “accelerated action” to achieve gender parity, which is the core mission of SDG 5.

   • SDG 8: Decent Work and Economic Growth

     The article connects gender diversity in leadership to economic performance. It cites a McKinsey analysis finding that companies with higher gender diversity on executive teams have a “39% higher likelihood of financial outperformance.” This links the goal of achieving gender balance not just to equity, but also to stronger economic outcomes and performance, which aligns with the objectives of SDG 8.

   • SDG 10: Reduced Inequalities

     The article argues that having more women in regulatory and policy-making roles leads to more inclusive financial systems. It states, “Without women at those tables, inclusive outcomes remain elusive.” The Women’s World Banking’s LDR programme specifically aims to equip women leaders to advance “women’s financial inclusion,” directly addressing the goal of reducing economic inequalities by ensuring financial systems do not leave women behind.

2. What specific targets under those SDGs can be identified based on the article’s content?

   • Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.

     The article is entirely focused on this target. It quantifies the lack of women in leadership in the financial sector, noting that “Only 16% of institutions are led by women, and women hold just 27% of deputy governor or C-suite roles.” The discussion about the “broken rung” and the need to build “pathways” for women into senior decision-making tracks directly relates to ensuring equal opportunities for leadership.

   • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value.

     This target is relevant through the article’s focus on career progression and removing barriers to senior roles for women. The “broken rung” where “high-potential women stall before entering senior decision-making tracks” is a barrier to full and productive employment. The LDR programme’s success, where “Over 63% of emerging women leaders have expanded their scope of responsibility or achieved promotion,” is a direct effort to achieve this target within the financial sector.

   • Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of… sex…

     The article connects women’s leadership in finance to broader economic inclusion. The LDR programme’s goal is to have participants “co-design and implement a real-world policy initiative that advances women’s financial inclusion in their home markets.” This directly supports the promotion of economic inclusion for women, who are disproportionately unbanked globally, as mentioned by the fact that LDR alumni “regulate financial systems that serve roughly two-thirds of the world’s unbanked women.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

   • Indicators for Target 5.5

     The article provides several quantitative indicators that align with the official SDG indicator 5.5.2 (Proportion of women in managerial positions):

     • The average Gender Balance Index (GBI) score is 42 out of 100.
     • The proportion of institutions led by women is 16%.
     • The proportion of women in deputy governor or C-suite roles is 27%.
     • The proportion of women in senior roles has remained at 30% since 2021.
     • The proportion of new appointments for female governors was 12% in the last year.

   • Indicators for Target 8.5

     The article implies indicators related to career advancement and promotion for women:

     • The promotion rate of women in leadership programmes: “Over 63% of emerging women leaders [in the LDR programme] have expanded their scope of responsibility or achieved promotion.”
     • The number of women reaching top leadership positions: “two alumnae now serve as central bank governors.”

   • Indicators for Target 10.2

     The article provides indicators related to the implementation of policies aimed at financial inclusion:

     • The rate of policy implementation from targeted programmes: “84% of participants report taking concrete steps towards implementing their policy action plans.”
     • The number of institutions adopting new inclusive policies: “One-third of institutions have implemented at least one policy designed through the LDR.”

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article. In this table, list the Sustainable Development Goals (SDGs), their corresponding targets, and the specific indicators identified in the article.

   SDGs	Targets	Indicators
   SDG 5: Gender Equality	Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.	Average Gender Balance Index (GBI) score: 42 out of 100. Proportion of institutions led by women: 16%. Proportion of women in C-suite roles: 27%. Proportion of women in senior roles: 30% (plateaued since 2021).
   SDG 8: Decent Work and Economic Growth	Target 8.5: Achieve full and productive employment and decent work for all women and men.	Likelihood of financial outperformance for companies in the top quartile for gender diversity: 39% higher. Proportion of women in a leadership programme who achieved promotion or expanded responsibility: 63%.
   SDG 10: Reduced Inequalities	Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of sex.	Proportion of programme participants taking steps to implement policy action plans for financial inclusion: 84%. Proportion of participating institutions that have implemented at least one policy for women’s financial inclusion: 33% (one-third).

Source: omfif.org