Maybe it is because I am a woman in an industry dominated by men, and because I chose to focus on sustainability at an early stage, that I have always been interested in the topic of diversity. Not only from the gender perspective, but also because of the validated belief that different backgrounds and opinions make for better-informed decisions.
While the Netherlands is making hardly any progress on this topic, the US is making great strides. I was positively surprised to read that a Spencer Stuart survey found that in 2017, half of the incoming directors on S&P 500 boards were women or from minorities. Female representation among new directors rose from 26% in 2012 to 36% in 2017, while 20% of new independent directors were male and female minorities.
The board gender diversity discussion was strengthened last year when several of the world’s largest institutional investors took a stand on this matter. The actions undertaken ranged from the installation of State Street Global Advisors’ Fearless Girl statue on Wall street, to BlackRock’s support for eight shareholder proposals on board diversity in North America.
Gender diversity on boards has improved prominently in recent years across several market capitalizations and markets. Government intervention in this area has increased, as several countries (e.g. India, France) adopted legislative measures to promote gender diversity at board level through mandatory gender quotas. However, the debate around the topic moved from a discussion around equality and fairness, to a matter of superior corporate performance, evidenced by a wide range of literature.
So what do these people do? Corporate boardrooms provide management and risk oversight while supervising the company’s strategy on behalf of the shareholders. Diversity becomes a crucial factor to promote success at the boardroom when understood from a broader perspective, moving beyond solely gender equality and including diverse representation of tenures, ages, nationalities and professional backgrounds.
It’s simple – diversity at the boardroom reflects the real world in which the company operates. An appropriate variety of director profiles allows for a better understanding of the company’s customer base, ensuring better adaptability to shifting consumer and market trends at an ever increasing pace. A wide range of perspectives in the boardroom is critical to effective corporate governance and potential disruptive discussions.
Well-diversified boards add value to a company since people from different backgrounds are more likely to approach issues from differing perspectives, leading to more effective decision-making and efficient supervision. Therefore, institutional investors have been praising board diversity as a key to sound corporate governance practices.
As part of Robeco’s Active Ownership approach, we have been addressing diversity in the boardrooms of our investee companies through our engagement and voting activities. In several markets, it is common to find director nominations to serve on the board included on the shareholder meeting’s agenda. A thorough assessment of the overall board diversity in terms of tenure, skills, gender and external commitments is conducted and compared to local best practices. Our voting guidelines have been recently updated to reflect this assessment criteria.
During our engagement with companies in the financial sector around the quality of their boards, a special focus was adopted to see how diversity affects their nomination policy, and which factors the company tries to diversify. Another example of our work in this field is a recent collaborative engagement conducted with RobecoSAM, through which we have been engaging on a wide range of gender equality and diversity measures of our investee companies.
In recent years, much of the focus on board diversity has focused solely on gender. However, if the argument for increased diversity is that it adds value to the board, then boards must strive to achieve diversity in the broadest sense in order to enhance business performance.
Assisted this month by engagement analyst Laura Bosch Ferreté.
This is our monthly column on sustainability investing by Head of ESG integration Masja Zandbergen.
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.