According to the report, mandatory retirement ages and term limits can be useful tools boards can use to refresh themselves. A better refreshment rate means a board is more likely to boast a diverse set of directors with a range of skills and backgrounds, as well as ages, gender and ethnicity.
"Companies in every industry are feeling investor pressure to refresh their boards, and many are focusing on diversity and adding more women directors. But diversity is more than a gender issue – it's about race, ethnicity, skills, experience, age and even geography, in addition to diversity of thought and perspective," said Paula Loop, Leader of PwC's Governance Insights Center.
"The picture of what a particular industry looks like today may not be the same in a few years as industry lines have started to blur, making a diverse boardroom even more important. In fact, experts we've interviewed prioritize skills like technology expertise for new directors."
The PwC report also noted that the U.S. currently lacks regulations to enforce diversity. In Europe, several countries, including Norway, France and the Netherlands, have introduced quotas for female representatives on the board. Germany introduced a law in 2015 requiring 30 percent of non-executive board members at large firms to be female.
But how important is boardroom diversity? British businessman and Anglo American chairman John Parker defended diversity in a report released in November on U.K. boardroom diversity.
"Many of us in business would attest that our experience on boards that embrace gender and ethnic diversity benefit in their decision making by leveraging off the array of skills, experiences and diverse views within such a team," he said in the report's introduction.
The report from the Parker Review Committee in association with EY, called for an increase in ethnic diversity and recommended that each FTSE 100 board should have at least one director of colour by 2021.
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