The proportion of women on company boards remains disappointingly small. International Women’s Day 2020 is an opportune moment to stress the importance of equality and inclusive growth in our Global Sustainability Strategy.
- Gender parity has a fundamental bearing on whether economies and societies thrive
- Women make up one half of the world’s talent; it makes no economic or business sense not to make the most of that
- Proxy voting seeking greater gender parity on company boards is a tool for positive change.
When we published our Global Sustainability Strategy in 2019, we set out a forward-looking perspective, supporting many of the UN’s 17 Sustainable Development Goals, by focusing on what we call the 3Es:
- Energy transition
- Environmental sustainability
- Equality and inclusive growth.
One of our aims is to encourage companies to provide greater opportunities for women at all levels of business.
This objective resonates with the World Economic Forum’s Global Gender Gap Report 2020, where there is an emphasis on the importance of women in leadership. This leads to changes that increase equality both in the workplace and in wider society.
Why does board diversity matter and where do things stand globally?
Many studies have shown that having women among a board of directors is good for business. For example, Harvard TH Chan School of Public Health says: “When Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile… reported a 42% greater return on sales and a 53% higher return on equity.”
And yet, as Exhibit 1 shows, female board representation remains far from parity in many countries.
Exhibit 1: Average percentage of women on boards (quoted companies; 2019)
Source: BoardEx; data as of 31 December 2019
A force for change: proxy voting
To address this issue, we have changed the proxy voting policy at BNP Paribas Asset Management to support enhanced board diversity across the companies in our portfolios. This links directly with the equality and inclusive growth pillar of our Global Sustainability Strategy.
As such, since 2019, BNPP AM’s voting policy has contained explicit provision on gender diversity, whereby we oppose all male director candidates if there are no women on the investee company’s board worldwide.
For Europe, North America, Australia and New Zealand, beginning in 2020, we further articulate our expectation for a minimum threshold of 30% of women on the board.
Under certain conditions, we could support boards that have a ratio between 20% and 30% of women, for example, if the company has made significant improvements in recent years, or if it commits to reaching 30% in two years’ time.
We analyse such companies to check if they respect these conditions, and we will engage with some of them in collaboration with our investment teams. We will systematically vote against male directors on boards where there are fewer than 20% female directors.
Language matters, too: #JustChair
Language plays an important role in ‘nudging’ mind-sets. We advocate replacing the use of the title ‘Chairman’ with the gender-neutral ‘Chair’. Titles help to shape societal norms and influence our perception of who is best suited to fill a role.
The ongoing use of a gender‐specific term for the most senior board position is not only puzzling and illogical; it is unjust and impedes progress towards diversity.
We are exploring how to use the hashtag #JustChair to establish a global campaign to drive positive change on this simple yet powerful item.
Walking the talk: critical to success
Our Global Sustainability Strategy defines our sustainable investment beliefs and ‘walking the talk’ is critical to our success. That is why we have made gender diversity a central pillar of our approach to corporate social responsibility.
The investment industry has lagged other professional services when it comes to gender diversity, so in 2019, our company set an aggressive ambition of having women in at least 30% of senior positions.
Today, over 35% of the fund and operating company board positions at BNP Paribas Asset Management are held by women. We know we have more to do, and we will continue our work.
We wish women around the world a safe and sustainable International Women’s Day, and we look forward to doing our part – as future makers – to push for improved gender diversity on the boards and management teams of companies around the world.
Watch the video with Jane Ambachtsheer
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Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients.
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