4/8/26

The ‘Trump effect’ is taking a toll on corporate gender goals

Changes at the Australian Securities Exchange are the latest sign of a global rollback of diversity policies

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This article is republished from The Financial Times.

Earlier this year I addressed an online workshop, part of a European company’s long-running programme for its female leaders. The organisers enthused about how participants would be logging on from its outposts around the world. They added: “Of course there won’t be any delegates from our US operation.”

Of course. For fear of antagonising Donald Trump’s administration, the company had blocked a cohort of promising future leaders from taking part.

We know about the “butterfly effect”, the idea that a flap of the insect’s wings in Brazil might ultimately trigger a tornado in Texas. When it comes to diversity policies, a more direct “Trump effect” is being felt across continents, most recently in Australia.

Two weeks ago, advisers to the Australian Securities Exchange laid out changes to its governance principles. Gender targets for female board directors would be frozen, those for executives removed, and progressive ideas about expanding the goals to cover race, sexual orientation, religious beliefs and socio-economic background would be shelved.

Philip Lowe, the former central bank governor who chaired the advisory group, wrote that the plan represented “evolution, not redesign”, calling it “common sense”. But critics view the proposals as a step backwards.

The Trump effect is only one factor here. Australia has good reasons to streamline a bloated set of guidelines that invited mere box-ticking approval. Attempts to expand targets to other groups had already proved divisive. The ASX’s 19-strong Corporate Governance Council split irreparably last year over its effort to reform the principles and was disbanded. What is more, workplace equality legislation partially duplicates the old board principles and now requires employers to monitor and report progress, including, if they so choose, on executive diversity.

Forthright investor John Wylie, founder of Tanarra Capital, was one loud voice attacking the broken system for cramping Australia’s competitiveness and the listed sector’s growth. Tanarra’s alternative “modernised” principles removed any diversity prescriptions and stated merely that “it is desirable that boards are diverse in their thought processes, life experiences, personal qualities and skills”.

The ASX proposals are more modest than Wylie’s call for a “fresh start”, but they echo his idea that “cognitive” diversity and diversity of “skills, experience and background” are as important as gender balance.

Even accepting a reset was overdue, though, I worry about how the flap of a regulator’s wings might affect women and other under-represented groups in the corporate world.

Targets for numbers of female board directors have helped increase the number of women on boards, whether in Norway, where they are mandatory, or the UK and Australia, where they are not. To the distress of equality advocates, the ASX plan retains a 30 per cent target rather than the higher 40 per cent goal suggested by the defunct governance council.

It is too early to tell what happens when targets are eased or scrapped, as happened at Nasdaq, which removed board diversity requirements for listed companies after a court ruling in 2024. But there is early evidence from the US of what may be a Trump effect. Proxy adviser Glass Lewis noted an overall slight increase in the number of women on the boards of the 3,000 largest listed US companies in 2025, but a continued drop in first-year appointments of women directors, down from 45 per cent of all such board hires in 2021 to 28.4 per cent last year.

Such shifts can have knock-on effects. Soft-pedalling of targets for the executive pipeline could undermine wider efforts to improve the lot of female employees, such as narrowing the pay gap or encouraging flexible working.

Meanwhile, the renewed emphasis on “cognitive diversity” is likely to comfort dominant groups in the workforce and on boards. According to one recent study, it could also put ethnic minority applicants off applying for jobs at those companies and deter sexual minorities from declaring their identity. “No language [about those minorities] and no measurements means no attention,” observes UCL professor Raina Brands.

I like to hope that earlier efforts to embed corporate diversity policies will mean they continue, even at companies that now dare not speak their name. But as regulatory requirements to target and report progress recede, the sad truth is it may well be harder to find out.

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