The Fearless Girl Beckons: Tracking Gender Diversity
by Sheila Oviedo
The Fearless Girl stands in front of the Charging Bull, her hands on her waist, her stare strong and defiant. She challenges Wall Street’s bull, which has long symbolized strength and prosperity in a male-dominated corporate culture. She also is a poignant representation of the growing demand for greater gender diversity.
State Street Global Advisors (SSGA) sponsored the statue in honor of International Women’s Day on 8 March 2017. On the same day, it also released its Guidance Document on enhancing gender diversity on boards. For SSGA, the starting point for increasing gender diversity is to have female representation on company boards. The company warned that it will vote against nominating and/or governance committees that do not act to improve gender diversity.
A week later, Blackrock, the world’s largest asset manager, released its engagement priorities for 2017-2018. These priorities included “diversity of expertise, experience, age, race and gender” on the board. Blackrock similarly noted that it will “hold nominating and/or governance committees accountable” if a company is unable to demonstrate progress on its diversity agenda. Both companies believe that a diverse board, with a broad range of perspectives, make better decisions.
Gender Diversity in the Boardroom
Sustainalytics has tracked gender diversity in global boardrooms since 2009. We recognized that women directors had an important contribution to make to the sustainable growth of a company. Our data show that gender diversity has improved over time. Within our global research universe, companies with all-male boards are in the minority and most companies have two or more women on the board. Interestingly, improvements in board diversity can be observed across all regions.
Created by artist Kristen Visbal, Fearless Girl is a bronze statue of a young girl installed in March 2017 on the Bowling Green in Manhattan’s Financial District. State Street Global Advisors (SSGA) sponsored the statue, which was erected in honor of International Women’s Day.
Percentage of Companies with Female Board Representation
Source: Sustainalytics Research 2017 (n=2,656)
Percentage of Companies with Female Board Representation (Regional Breakdown)
Source: Sustainalytics Research 2017 (n=2,656: US + Canada 916; Europe 996; Middle East and Africa 25; Latin America 62; Asia-Pacific 657)
In addition to gender diversity in the boardroom, Sustainalytics also assesses the quality of corporate diversity programs. Leading companies build best-in-class diversity programs into the corporate structure and go beyond legal compliance. Leading programs are supported by either the board or the C-suite, have measurable plans to promote diversity and inclusion, and are monitored or audited annually.
While boardroom diversity is progressing, company-wide diversity programs tell a different story. Our research shows that many companies do not even have diversity initiatives and only a fraction have a comprehensive diversity program. Out of 7,605 companies assessed, only 8% have a comprehensive program, of which most are European companies. The low percentage of companies with comprehensive diversity programs is an area of attention for gender-sensitive investors.
Percentage of Companies with Diversity Programs
Source: Sustainalytics Research 2017 (n=7,605)
Percentage of Companies with Comprehensive Diversity Programs (Regional Breakdown)
Source: Sustainalytics Research 2017 (n=7,601: US + Canada 3,276; Europe 1,779; Middle East and Africa 238; Latin America 364; Asia-Pacific 1,944)
Numerous studies show that a meaningful diversity program has several benefits. It contributes to talent recruitment and retention, fosters employee loyalty and reduces costs related to high employee turnover. The Commonsense Principles of Corporate Governance signed in 2015 by 13 chief executives who represent some of the largest US corporations point to the acceptance of diversity in the corporate world.
Some investors use our research to promote progressive corporate behavior or to create a positive social impact. For example, these investors may screen for companies with female board representation or those with comprehensive diversity programs. Investors may also use our research to engage with companies to encourage them to appoint more women to the board, and to implement or enhance diversity programs.