Newton's Morrissey talks board diversity at corporate secretaries' conference
Growing recognition of the need for a broader range of perspectives toward how boards address governance issues is helping to advance efforts to achieve greater gender and ethnic diversity on boards and in senior management ranks
‘During the financial crisis, we saw how people were caught out if they were extrapolating the past,’ Helena Morrissey, CEO of UK-based Newton Investment Management, told a hall full of people during her opening address at the Society for Corporate Governance's annual conference in Colorado Springs on June 23. Quoting Albert Einstein, she added, ‘If we’re in a different place, we can’t apply old mindsets.’
Recently appointed chair of the Investment Association, whose members manage more than £5.5 trillion for clients around the world, Morrissey said she likes to talk to people about her belief that investors can drive positive change at companies.
As an example, she cites the 30% Club, the campaign she founded in 2010 to with a goal of having women appointed to 30 percent of the seats on the boards of the 100 largest UK companies. In 2011, just a few months after the 30% Club was formed, Lord Mervyn Davies released his first report on gender diversity in the boardroom, which urged FTSE 100 boards to aim to have no less than 25 percent of board seats occupied by women by 2015. That report helped accelerate the pace at which women were appointed to boards, which jumped from 12.2 percent to 26.1 percent between 2009 and 2015, compared with an increase of just 5.3 percentage points between 1999 and 2009.
‘The lesson was how this went from being seen as a women’s issue to everyone’s issue – specifically a business issue,’ Morrissey said. The most important factor in that change was that men were involved. Enlisting the help of two well-known and well-respected chairman of FTSE-100 companies, who said they had seen the positive impact that having women on a board had had on decision-making but weren’t able to find enough qualified women to serve on boards.
Enlightened men used peer pressure to get more men business leaders to buy into the idea of greater board diversity. At the same time, there was pressure from other corners for legislation around the issue, but Morrissey realized that if legislation had been imposed, it would have created resentment and wouldn’t have resulted in real change. ‘So we had to convince the government not to impose legislation to change this.’
The 30% Club has mounted a multi-prong effort to advance the campaign, including convincing board chairs to talk about how critical gender equality in the boardroom is and getting business schools to provide scholarships to encourage women considering mid-career changes to go into business. ‘We’ve had a lot of men involved as mentors from 35 organizations and men say it’s opened their eyes about what’s occurring in their organizations,’ Morrissey said
The Club has also fostered collective engagement on this issue by 27 different investors, including institutional leaders such as BlackRock in an effort to move matters forward more quickly, Morrissey said.
There are now ten 30% Clubs around the world, including in the Middle East, all of which involve male CEOs. While each club has measureable goals, rather than being imposed it’s important they be reached by letting each country follow its own pace of change, Morrissey said. Since the launch of the US 30% Club in 2014, 33 members that lead public companies have together added 23 net new women to their boardrooms and now have 28 percent of board seats on average occupied by women% women.
New efforts launched by the 30% Club include the Diversity Project to address lack of diversity in investment fund management, and the Club has adopted a new goal of achieving 30 percent women on executive committees by 2020.