Julia Irvine 22 Nov 2018 04:24pm

Investors take companies to task over gender policies

Listed companies that are dragging their feet over promoting women into senior roles should take note of the latest stewardship survey from the Investment Association (IA)

It shows that gender diversity is having a significant effect on the way investors are voting. Not only are they placing greater emphasis on boardroom diversity but they are voting on the basis of how diverse companies are.

The survey – of 59 IA members who between them manage more than £5.6trn of assets in the UK – found that four in 10 (42%) asset managers had made a voting decision in 2018 based on the company’s gender diversity and over half (56%) had actively engaged with companies about their gender diversity policies.

“Investors clearly want to see more women in the boardroom and senior management positions,” said IA chief executive Chris Cummings. “Our study show that companies which are lagging behind on gender diversity should expect investors to take action if they do not see progress.”

He said that initiatives like the Hampton-Alexander Review had emphasised the importance of having greater diversity at the top of UK companies.

“The fact that 40% of asset managers took a voting decision based on gender diversity shows that they are reflecting those concerns when it comes to engaging with companies and voting at their agms,” he warned.

“Companies should expect greater scrutiny on diversity issues in the future, and should be acting now to address the imbalances they have at the top.”

Last week, the latest report from the Hampton-Alexander Review revealed that while the number of women on FTSE 100 boards has finally broken through the 30% barrier and is on course to meet the target of 33% of all board level positions by 2020, this was not reflected among FTSE 350 companies.

Almost one in four has just one woman on the board and four of them still have all male boards. “It is time to call out the 75 at ‘one & done’ boards that are dragging overall progress downwards,” the report says.

“The 33% target is a collective effort and it is incumbent on every FTSE 350 listed company to play their part. Get with the new norm – today one woman at the table is little different to none.”

The survey also reveals that investor engagement is growing: more than 7,000 individual engagements with UK companies took place in the six months to end June, with asset managers averaging 158 engagements each.

More than three quarters (80%) believe that engagement leads to better investment decisions and the average firm has 33 staff, comprising portfolio managers, analysts and stewardship specialists, working in its engagement and stewardship activities. Nine out of 10 asset managers use these in-house resources to engage with companies.

Cummings said that the findings showed that the industry was taking its stewardship seriously.