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Responsible Investing

Chasing boardroom equality

Amy M. O'Brien
Global Head of Responsible Investing (RI)
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Women have made it to the boardroom, and now it’s time for them to lead.

Today, women have a seat in all S&P 500 company boards , and they constitute 45% of all new directors joining boards at companies of all sizes.

Nonetheless, Amy O’Brien, Nuveen’s Global Head of Responsible Investing, says being in the room is no longer enough.

Women are now gaining seats in company boards. Why is that not enough?

Being in the room is no longer enough: Only by gaining access to leadership positions can women properly influence board agendas and ensure that their perspectives are considered.

Currently, women account for less than 20% of board committee chairs globally according to Deloitte. Another study found that women are less likely than men to serve as board chairs or lead independent directors, even after controlling for the relatively shorter tenures of female directors compared to their male counterparts.

Why are some companies slow to change?

Boards slow to change are quick to point to logistical hurdles as an excuse for their inaction. They tell us competition for talent is fierce and top female candidates are difficult to recruit.

The reality is that some companies are simply too limited in their outlook. Instead of relying on the status quo to fill open seats, they can engage outside recruiting firms with a track record of identifying top female talent. They need to think more expansively about what skills they need on the board. A new board member need not be a current or former CEO. Indeed, a CFO, CMO, chief human resources office, or business unit head can bring valuable experience to the boardroom.

What can companies do to improve gender diversity in the boardroom?

Companies whose boards are truly diverse will engender additional corporate and societal benefits, including happier employees and better engagement with environmental, social and governance (ESG) considerations.

Companies should look to governance best practices and conduct annual board evaluations to review committee assignments and make sure they are rotating committee chair roles as a way to ensure that more members of the board, including women, can take on leadership roles. Ongoing board training can also help board members, regardless of their background, learn and refresh skills necessary for effective board leadership.

How can the investment industry play a part?

Boards need diverse perspectives to avoid groupthink, ensure understanding of the diverse markets in which they operate, capitalize on the fast-moving trends reshaping the global economy and retain and attract employee talent. Large institutional investors have a duty to press for greater board leadership opportunities for women – and not just for the sake of gender equality.

But it isn’t just the large institution that holds a responsibility, managers must also take action to increase leadership opportunities for women and that starts with engagement. Typically, smaller and mid-size companies are more vulnerable to diversity challenges and by initiating a dialogue with their leadership we can create real change either in female appointments or with a commitment to diversity. If leadership is not responsive, take concrete action and use the power of the proxy to vote against leadership without diversity.

Beyond engaging the corporate, managers should also look to their own gender inclusion efforts globally. While North American and European companies have made progress, Asian nations and, specifically Japan, lags behind. Women hold just 5.2% of board seats in Japanese companies, according to Deloitte, so we need to apply the same criteria used for U.S.-based firms to nearly 400 Japanese companies that currently have no female representation. Directors at Japanese companies who are responsible for gaps in gender diversity can expect us to vote against them.

Every proxy season offers another opportunity for shareholders to deliver the message that diverse boards with diverse leaders deliver better results for their companies and our world. Let’s keep pushing for boardroom equality.
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2Equilar’s Gender Diversity Index:
3Deloitte’s Women in the boardroom: A global perspective
4Nili, Yaron, Beyond the Numbers: Substantive Gender Diversity in Boardrooms (October 20, 2017). 94 Ind. L. J. 145 (2019); Univ. of Wisconsin Legal Studies Research Paper No. 1436.
5Deloitte’s Women in the boardroom: A global perspective
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