Institutional investors urge Russell 1000 companies to add women to their boards
A large number of institutional investors with more than USD1.2trn in assets under management, along with representatives of some of the nation’s leading women’s organisations, have sent a letter to 127 companies within the Russell 1000 Index urging them to embrace gender diversity by including female representation on their boards.
The Thirty Percent Coalition, a coalition that includes senior business executives, statewide elected officials, national women's organisations, institutional investors including pension funds, labour unions, religious organisations and sustainable investment firms, corporate governance experts, board members and others, which was formed in late 2011 to address the lack of gender diversity in corporate boardrooms, organised the initiative and letter.
The Coalition has set a goal of women holding 30 per cent of board seats across public companies by the end of 2015. According to reports by Catalyst, ION and Governance Metrics International, women only hold roughly 12 to 16 per cent of corporate board seats today.
“We must do better,” say the signatories in their letter, which asks companies to work with them to bring the number of women on corporate boards to 30 per cent by the end of 2015.
Last June, the Coalition sent a similar letter to 41 companies within the S&P 500 Index that do not have women on their boards. Since that time, members of the coalition have been engaged in dialogue with several of those companies and have also filed shareholder resolutions with some of the companies, asking them to commit to gender diversity on their boards.
The new letter has been sent to the 127 companies within the Russell 1000 – essentially the largest 1,000 companies in the US – that do not have any women on their boards. In the letter, the signatories cite studies demonstrating a correlation between greater gender diversity among corporate boards and management, good corporate governance and long-term financial performance.
“As someone who has been involved in a number of boards and dozens of businesses, I know the presence of women and minorities in the board room brings fresh perspectives, new ideas, and more tough questions to the decision making process,” says Pennsylvania Treasurer Rob McCord, a signatory to the letter. “Now, as an institutional investor and fiduciary, I believe it’s in our long-term best interests to bring about this kind of change, which is why I’ve spoken out on the need for more women in the board room and taken steps to promote progress on this front.”
The Thirty Percent Coalition represents the first time that large institutional investors and national women’s groups have joined forces to press companies to improve their governance by adding gender diversity to their boards.
“Women’s groups across the nation have long fought for gender equality, and state pension funds and other institutional investors have long been interested in good corporate governance and long-term investment returns,” says Thirty Percent Coalition executive director Charlotte Laurent-Ottomane. “What’s new today is that substantial research underscores the correlation between gender diversity, good governance and positive long-term corporate performance. We are urging the business community to take this step not just because it’s the right thing to do, but because it’s the smart thing to do.”
The letter references quotas being adopted in numerous countries around the world to increase the number of women on corporate boards but proposes instead that companies in the US voluntarily embrace more ambitious diversity goals because it makes business sense.
“We are not advocating for quotas,” says Joe Keefe, president and CEO of Pax World Mutual Funds and chair of the Coalition’s institutional investor committee. “We are simply urging these 127 companies, and companies in general, to do better when it comes to gender diversity. We would like to see 30 per cent of corporate board seats held by women by 2015. This is a modest, reasonable goal when women comprise over half of the workforce, represent a majority of college graduates and grad students, own 40 per cent of American businesses and are the breadwinners or co-breadwinners in two thirds of American households.”
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