Institutional investors are pushing for Russell 1000 Index organizations to add women to board positions.
(February 6, 2013) -- Pension funds and other institutions are pushing Russell 1000 companies for gender equality on board positions, with the goal of 30% of women on corporate board seats by 2015.
According to reports by Catalyst, ION and Governance Metrics International, women only hold roughly 12% to 16% of corporate board seats today.
At the heart of this initiative is the "Thirty Percent Coalition"--a group of senior business executives, statewide elected officials, national women's organizations, institutional investors, labor unions, corporate governance experts, board members, and others to address gender representitiveness in corporate boardrooms. "We must do better," say the signatories in their letter, which has been sent to the 127 companies within the Russell 1000--the largest 1,000 companies in the US--that lack women on their boards. In the letter, the signatories cite studies demonstrating a correlation between greater gender diversity among corporate boards and management, good corporate governance, and long-term financial performance.
Thirty Percent Coalition Executive Director, Charlotte Laurent-Ottomane acknowledged that women’s groups across the US have long fought for gender equality, and that state pension funds and other institutional investors have expressed continued interest in good corporate governance and long-term investment returns. "What’s new today is that substantial research underscores the correlation between gender diversity, good governance and positive long-term corporate performance. We are urging the business community to take this step not just because it’s the right thing to do, but because it’s the smart thing to do," she said.
"As someone who has been involved in a number of boards and dozens of businesses, I know the presence of women and minorities in the board room brings fresh perspectives, new ideas, and more tough questions to the decision making process," added Pennsylvania Treasurer Rob McCord, a signatory to the letter. "Now, as an institutional investor and fiduciary, I believe it's in our long-term best interests to bring about this kind of change, which is why I've spoken out on the need for more women in the board room and taken steps to promote progress on this front."
Implementing quotas is not the way to achieve this, the signatories believe. According to Joe Keefe, president and CEO of Pax World Mutual Funds and Chair of the Coalition’s Institutional Investor Committee, the 30% target is a modest, reasonable goal when women comprise over half of the workforce, own 40% of American businesses, and are the breadwinners or co-breadwinners in two-thirds of American households.
Last June, the coalition sent a similar letter to 41 companies within the S&P 500 Index that do not have women on their boards. Since that time, members of the coalition have been engaged in dialogue with several of those companies and have also filed shareholder resolutions with some of the companies, asking them to commit to gender diversity on their boards. “We intend to follow up and engage with each of these 41 companies, asking them to join the rest of the S&P 500 in welcoming women to their boards," Anne Sheehan, director of corporate governance at the California State Teachers' Retirement System, one of the signatories to the letter, said in a statement at the time. "Whether it’s in dialogue with management, through shareholder resolutions, or related strategies, we intend to press for change. And then we’ll move beyond the S&P 500 to other companies as well. Our goal is to continue engaging companies until women hold at least 30% of corporate board seats across the United States.”