SSGA finds resistance amid progress on board diversity

Sep 13, 2019
Almost half of companies targeted now have – or plan to have – female director

State Street Global Advisors (SSGA) is seeing progress in its multi-year campaign to boost female representation in the boardroom – but is still finding that many companies are not taking action, according to a new report

The firm states in its latest stewardship report that as of June 30, 2019, 43 percent of companies – representing more than 580 of the 1,350 identified as part of SSGA’s Fearless Girl campaign – have either added a female director or committed to doing so. The campaign targets firms that have all-male boards.

Another sign of progress has been attitudinal, according to SSGA. ‘The big difference between the start of the campaign and today is that the conversation in boardrooms has moved from Why do we need a woman? to Why don’t we need a woman? on the board,’ the authors of the report write. ‘This change, which may seem subtle, has an impact that goes beyond the boardroom and has management thinking about gender diversity at all levels of organizations.’

Despite this, more than half (57 percent) of the companies SSGA has targeted as needing to boost diversity have yet to take action – and may face a firmer approach from the asset manager. ‘[I]n 2020, we will vote against the entire nominating and governance committee, not just the chair, in our target markets if we have concerns about the lack of gender diversity for four consecutive years and are unable to engage in productive dialogue,’ the report states.

Rakhi Kumar, senior managing director and head of ESG investments and asset stewardship at SSGA, says the 57 percent of companies resistant to change tend to be mid-cap and smaller companies that sometimes have ownership concentrated under a major shareholder and/or have smaller boards.

Although there is more appreciation of the issue than two years ago, some companies still do not see the need to expend the cost of bringing in a new, female director if they have a vacancy on the board, Kumar notes. ‘Eventually, however, people find the position is hard to defend,’ she tells Corporate Secretary.

The report also highlights differing rates of change across different international markets. For example:

  • In the US, 44 percent or 404 of 910 Russell 3000 companies SSGA identified as not having a woman on their board have added a female director or committed to do so
  • In Canada, 44 percent or 32 of 73 TSX companies identified as not having a woman on their board have added a female board member or committed to do so
  • In the UK, 85 percent or 11 of 13 FTSE 350 companies identified as not having a woman on their board have added a female director
  • In Europe, 62 percent or eight of 13 companies identified in the STOXX 600 ex-UK as not having a woman on their board have added a female director.
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