Asset managers demand companies take action on gender diversity

Columbia Threadneedle and RBC Global Asset Management are stepping up their efforts to improve gender diversity at public companies, pledging to vote against board directors of businesses that are failing to promote women to top jobs.

RBC GAM said it would vote against all members of the nominating or governance committees at the annual meetings of businesses where women did not make up a quarter of the board under new plans for the upcoming annual meeting season. The policy will apply in the US, Canada, the UK, Ireland, Australia and New Zealand.

This will pit the asset manager against businesses such as JPMorgan, where women make up 18 per cent of the board, and Warren Buffett’s Berkshire Hathaway (21 per cent). Other big companies that fail to hit the 25 per cent hurdle include Comcast, PepsiCo and Pfizer, according to ISS ESG, a division of Institutional Shareholder Services.

Columbia Threadneedle, the $494bn asset manager, is planning to target companies with a lack of women in senior leadership, an extension of its policy targeting board diversity laggards.

Iain Richards, head of responsible investment at Columbia Threadneedle, said it would vote against the chair of the nomination committee at FTSE 350 companies that it believes are too slow in addressing a lack of women in leadership roles. It is the first time a big asset manager has publicly taken such a tough stance. 

“We are focusing on the laggards. These are the ones we need to send a wake-up call to,” he said.

A report from the Hampton Alexander Review, an independent body, last year found that British companies including tobacco businesses Imperial Brands and British American Tobacco; Reckitt Benckiser, the consumer goods company behind Dettol; miners Glencore and Antofagasta; travel business Carnival; and the beleaguered NMC Health, whose shares were suspended two weeks ago, were among the poorest performers in terms of women holding executive roles or reporting directly to the executive committee.

Clare Payn of the 30% Club Investor Group, which advocates for more women in business, said the research for diverse boards and leadership teams was compelling. A study last year by Credit Suisse found that companies with more women in senior management yielded superior returns. “It’s not just the right thing to do, it’s also the best thing for a business,” she said.

A separate report from the Hampton Alexander Review this year found that women now make up 33 per cent of all FTSE 100 board members, up from 12.5 per cent less than a decade ago.

According to ISS ESG about a third of companies in the S&P 500 have fewer than 25 per cent women on their boards, down from almost two-thirds in 2016. Women make up less than a quarter of board directors at 66 per cent of companies at Russell 3000 compared with 82 per cent in 2016.

Columbia Threadneedle said it was reviewing whether to roll out its new policy on senior executives across the world. The company made women on boards a voting issue in 2016. Its policy varies by region, with the company voting against companies where women do not make up a quarter of the board in the UK, while the threshold is 15 per cent in the US.

RBC plans to increase its threshold for women on boards to 30 per cent by 2022.

Catherine Banat, director of US Responsible Investing for RBC, said the asset manager was committed to advocating for women on boards. “By adding our voice and by exercising our votes with consistency we are optimistic that we can make a difference,” she said.

Last week, the Investment Association, the UK trade body whose members oversee £7.7tn in assets, wrote to almost a fifth of FTSE 350 companies about their lack of gender diversity on their boards and executive committees, calling on them to outline what actions they are taking to improve the gender balance in their leadership teams.

Deborah Gilshan, founder of the 100% Club, a network for professional women, said there was growing evidence of governance improvements on boards that are more diverse.

“[The move by Columbia Threadneedle and RBC] is a reflection of how big investors are beginning to step up on diversity,” she said.

According to SquareWell, a shareholder advisory business, a third of the world’s 30 largest asset managers have a public policy on gender diversity on boards.