“Gender-balanced leadership affects a company’s abilities to prepare, adapt, and excel.”
– Regina Curry
Many current outlooks for investors and industry regulators include gender-balancing leadership and boardrooms. Skeptics question whether ensuring gender-balanced leadership detracts from company performance, however, much academic and industry research determined that it does not.1 Moreover, opportunities for long-term company performance result with board compositions of at least 30% women:2,3
- Chief investment officers (CIOs) of leading institutional investment firms said if choosing between two comparable firms, they would allocate twice as much capital to the more gender-diverse private equity firm. These CIOs focus diversity, equity and inclusion (DEI) requests on asset managers to advance their DEI goals and public commitments.4,5
- California State Teachers’ Retirement System, a pension with assets over $300 billion, will escalate proxy votes to achieve board diversity by increasing voting against:6
1) the entire board of directors of companies that do not have at least one woman on the board,
2) directors on a board’s nominating committee if the company does not have at least 30% women board members, and
3) nominating and governance committee members of companies in the Russell 1000 Index that do not disclose the skills and diversity characteristics of their board members.
- Nasdaq Inc. now requires US companies to meet board diversity objectives by annually disclosing publicly the diversity of their boards and setting minimum targets of at least two gender-diverse board members: one female plus a member of an underrepresented minority group or someone who identifies as LGBTQ+.7 By 2026, this requirement will increase to at least two diverse directors, including one from each diversity group.8
- The European Central Bank (ECB) engaged banks lacking diversity policies or internal targets for gender diversity at board level in 2022. A third of the banks under ECB supervision did not meet their 2021 targets for gender representation at board level.9
- Over 400 financial services firms globally now commit to monitoring their gender balance progress with targets, creating benchmarks for company differentiation.10
Gender-balanced leadership affects a company’s abilities to prepare, adapt, and excel. Furthermore, it addresses both investors’ and regulators’ demands for gender equity and progress while delivering more business opportunities and growth.
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1. Source: “Does Gender Diversity on Boards Really Boost Company Performance?” Knowledge at Wharton, School of the University of Pennsylvania, May 18, 2017.
2. Source: “Diversity in the Management of Investments,” California State Teachers Retirement System, 2021 Annual Report, page 12.
3. Source: Undiversified: The Big Gender Short and Investment Management by Ellen Carr and Katrina Dudley, Columbia Business School Publishing, August 2021.
4. Source: “The state of diversity in global private markets: 2022,” McKinsey & Company, November 1, 2022.
5. Source: “Tracking diversity, equity, and inclusion data in private markets,” McKinsey & Company, October 31, 2022.
6. Source: “CalSTRS will escalate proxy votes to achieve board diversity, net zero progress and climate change action,” California State Teachers Retirement System, March 30, 2022.
7. Smaller reporting companies, non-domestic issuers, and companies with five or less directors have comparable gender diversity objectives. All companies that do not meet a board diversity objective must explain why. Source: “Nasdaq’s Board Diversity Rule, What Nasdaq-Listed Companies Should Know,” February 18, 2022.
8. Source: “Nasdaq’s New Board Diversity Rules: What’s the Impact?” MSCI, February 1, 2022.
9. Source: “Supervising banks’ governance: structure, behavior and culture,” Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, June 11, 2022.
10. Source: Women in Finance Charter list of signatories (June 2022), HM Treasury, United Kingdom.
