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March 01, 2013
Shareowners Call for Gender Diversity on Corporate Boards
    by Robert Kropp

Institutional members of the Thirty Percent Coalition file shareowner resolutions with 20 companies, requesting that they support diversity by including women and minority candidates on their boards.

Gender diversity in corporate boardrooms leads to improved financial performance. "Studies all echo the same principle," states a 2010 report by Corporate Women Directors International (CWDI). "The greater the percentage of women on boards and in senior management, the better the company's financial performance."

However, "Overall trends on the board diversity in US public company boardrooms are sobering," the Thirty Percent Coalition observed. The Coalition, which was formed in 2011 to address the "glacial progress" on the issue—the number of women on US corporate boards "has essentially remained stagnant over the past five years," it states—includes a number of institutional investors committed to sustainable corporate governance practices.

In 2012, institutional investors representing over $1.2 trillion in assets under management sent letters to S&P 500 and Russell 1000 companies that do not have women on their boards. The investors have followed up on the letters by submitting shareowner resolutions with 20 companies this year, calling on them "to adopt charter language supporting board diversity and institute a practice of including women and minority candidates on their boards."

The Thirty Percent Coalition Institutional Investor Committee is co-chaired by Janice Hester-Amey of the California State Teachers Retirement System (CalSTRS) and Timothy Smith of Walden Asset Management. "It makes a powerful statement when investors and women's organizations raise this issue with leading US companies lacking diversity at the Board level and call for action," they said. "The significance of this initiative is magnified when investors follow up with shareholder resolutions for votes at stockholder meetings. This demonstrates how seriously investors take board diversity as part of good governance."

Trillium Asset Management, an institutional member of the Coalition, filed board diversity proposals at four companies identified as lagging sector peers. A resolution filed with Hartford Financial Services states, "Companies combining competitive financial performance with high standards of corporate governance, including a gender balanced board, are better positioned to generate long-term value for their shareholders."

"We are pleased to be approaching successful withdrawals with all these companies," Susan Baker of Trillium said.

Calvert Investments' shareowner resolutions on the issue state, "In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints, backgrounds, skills, and experience is critical to a company's success."

"Not only do women and minority directors help companies reach broader markets, but they also bring independent thought and perspectives to the table which may not exist in a homogeneous board," Christine DeGroot of Calvert said. "By incorporating gender and ethnic diversity into their formal director selection criteria, companies demonstrate that they recognize the value of corporate diversity, and assure shareholders that it will remain a priority regardless of changes in leadership."

Pax World Management is another institutional member of the Coalition. Its Global Women's Equality Fund invests primarily in large-cap companies that promote gender equality and women's advancement.


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