Invested in gender diversity

• Author: Rakhi Kumar
• Position: Senior managing director and head of ESG Investments and Asset Stewardship at State Street Global Advisors
• Pages: 18-19

POINT OF VIEW

OVER THE PAST decade, there has been mounting

evidence that greater level s of gender diversity can

have a positive impact on corporate performance

and economic growth. Most releva nt for investors,

MSCI found that companies with strong female

leadership at the board level generated a return

on equity 36.4 percent higher than companies

without a critical mass of women on their boa rds.

For both economic and social reasons, t here has

been a surge in interest from investors about how

they can encoura ge gender diversity on corporate

boards, in the C-su ite, and at other levels of man-

agement. To support these efforts, State Street

and asset mana gers of all sizes are developing new

tools that empower investors to promote gender

diversity at the companies in which they invest.

In March 2017, we placed the “Fearless Girl”

statue in the heart of New York’s financial d istrict

to serve as the public face of our efforts to raise

awareness about the importa nce of gender diversity

in corporate leadership. is ca mpaign, however,

is about much more than raising awa reness.

As shareholders, we cast votes on candidates to

a company’s board of directors and other import-

ant issues facing the company. rough this proxy

voting process, we have voted against nominees to

all-male boards that are not taking adequate steps

to add female representation. In addition, we are

engaging direc tly with companies about diversity and

other thematic environmental, socia l, and governance

(ESG) topics and publishing thought pieces to e ducate

boards about effective pathway s to increasing diversity

at all levels of the organ ization.

Since March 2017, we have called on more than

1,200 companies with no women on their boards to

take action. We are pleased that more tha n 300 of

those companies have now added a woman to their

boards and 28 more have committed to doing so.

But we know there is more work to be done. In

September 2018, we announced an escalation of

our board diversity voting guidelines. Beginning

in 2020 in the Australian, UK, and US markets

and in 2021 in Canada, Japan, and continental

Europe, we will vote aga inst the nominating com-

mittee’s entire slate of nominees if a company does

not have at least one woman on its board and has

not engaged in successf ul dialogue with us on the

matter for three consecutive yea rs.

Why are we giving companies three years to

implement changes that we believe would have an

immediate positive impact for investors before ta king

escalated voting ac tion? Our goal is to ensure effective

independent board leadership, which involves achiev-

ing the right skil l sets as well as a diversity of views.

We realize that achievi ng this can’t happen overnight

and that adding qualified candidates should be a

thoughtful proce ss that can take upward of a year.

While having only one female director on a

board shouldn’t be seen as the end of a company’s

diversity journey, we believe that adding a fema le

perspective to the boardroom is an important

first step. e Fearless Girl campaign is about

changing the mind-set of boards on diversity—

moving the conversation from “Why do we need

gender diversity?” to “Why don’t we have board

diversity?”—and we believe that adding even a

single female director helps to shif t this mind-set.

Diversity is a relevant issue for all companies

regardless of sector, market, or size. We found that

Invested in Gender Diversity

Across the investment industry, asset owners and asset managers

push to enhance gender diversity at all leadership levels

Rakhi Kumar

POINT OF VIEW

COURTESY O F STATE STRE ET GLOBA L ADVISOR S

18 FINANCE & DEVELOPMENT | March 2019