Investors, investment managers and asset owners must look more closely at their companies’ appointment of board members and “encourage progress on gender diversity”, the 30% Club Australia has said.
According to a statement, 30% Club Investors Working Group chair Susan Roberts said more investors across Australia and the globe were signing the 'Statement of Intent for Investors', a 30% Club document declaring a company’s pledge to achieve the goal of “30 per cent of ASX200 seats [to be] held by women by end-2018”.
“It is heartening to see that the investment community and shareholders are increasingly looking closely at the ESG and ethical aspects of how listed companies are running their boards and how they are configured,” Ms Roberts said.
However, she argued more needed to be done.
“Whilst we are strongly supportive of voluntary targets over quotas, we believe that it is important that investors actively oversee companies’ actions,” Ms Roberts said.
“We encourage investors to engage directly with companies in the first instance. However, we believe that, over time, this should extend to AGM voting in the event of inadequate leadership.”
30% Club Australia chair Patricia Cross pointed to a recent Australian Institute of Company Directors report that showed the monthly rate of appointment of women to ASX200 boards fell from 44 per cent last year to 30 per cent this year.
“This is a very disappointing result,” Ms Cross said.
“I think there is a conscious bias in terms of how we put our boards together and that becomes very clear from some of the 30% Club research when chairs and board directors talk about fit and style.
“There is a real aversion to putting people on boards they perceive will not be part of that fit.”
Ms Cross also pointed to existing research that showed better long-term returns and return on equity were correlated with higher female representation in leadership and board roles.
“Research is done in various ways but the overwhelming conclusion is that diversity matters in producing better results,” she said.
According to Ms Cross, fund managers needed to switch their focus from the short-term to the long-term.
“But what is now happening is that the beneficial owners are saying enough is enough – we want to look at long-term wealth creation, we want companies that are well governed and we want companies that are going to be sustainably put together in a way that they can deliver wealth for us over the long-term,” she said.
“Diversity is a critical component of that.”
A number of investment managers have signed the Statement of Intent document, including AMP Capital, Blackrock Investment Management (Australia), Colonial First State Global Asset Management, Commonwealth Superannuation Corporation, Principal Global Investors (Australia), State Street Global Advisors and VicSuper.
