Continuing its push for diversity among boards, The California Public Employees’ Retirement System (CalPERS) sent letters to 504 Russell 3000 Index companies calling for changes in the appearance of their boards of directors.
Detailing CalPERS’ evidence that board diversity yields positive performances, the $330 billion fund requested each company address the lack of diversity by developing and disclosing their corporate board diversity policies and implementation plans.
“Simply put, board diversity is good for business,” Anne Simpson, CalPERS investment director, sustainability, said in a statement. “It is essential in today’s global economy that boards avoid ‘group think’ and ensure there is the breadth of experience, skills, and knowledge necessary to meet complex business needs.”
A long advocate of diversity in corporate culture, CalPERS and the California State Teachers’ Retirement System (CalSTRS) in 2011 developed the Diverse Director DataSource known simply as “3D.” The program was designed to simplify a company’s search in finding diverse talent to serve as directors on corporate boards. Last year, 3D became available through the Equilar Diversity Network—a registry for board-ready executives through ethnic and gender diversity organizations. Last month, CalPERS advocated for corporate disclosure of human capital management policies. In 2015, the fund also pushed for amendment of the proxy rule regarding board nominee disclosure.
CalPERS board diversity principles are outlined in its governance and sustainability principles document. In addition, diversity and inclusion is one of its six strategic initiatives, identified within its environmental, social, and governance (ESG) strategic plan, which was adopted by the board last August.
Just last week during this year’s proxy voting season, the fund addressed the impact its policies are having on companies.