Gender Diversity on Company Boards Improves Due to Pressure from Big Three Asset Managers

An NBER study shows the push by Vanguard, BlackRock and State Street has rippled through corporate America.


More women are sitting on U.S. company boards as the result of a gender diversity campaign by the three largest asset managers, according to a study by the National Bureau of Economic Research, a nonprofit best known as the official arbiter of when recessions have arrived.

In 2017, Vanguard Group, BlackRock and State Street Global Advisors launched campaigns to boost female membership on boards, NBER noted.

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NBER’s study estimates these campaigns led U.S. corporations to add at least 2.5 times as many female directors in 2019 as they did in 2016. Companies boosted diversity by pinpointing candidates beyond their executives’ existing networks and by placing less stress on candidates’ management experience. These companies “also promoted more female directors to key board positions, indicating firms’ responses went beyond tokenism,” NBER wrote.

The people who run companies—and designate directors—continue to be overwhelmingly male. Women remain underrepresented in the highest levels of U.S. business leadership, accounting for just 5% of public company CEOs and 18% of top executives, despite accounting for 48% of the labor force and 40% of managers, the study said.

As recently as 2016, only 13% of public companies’ directors were women, so California adopted a board gender quota—since overturned in courts—and other states have proposed similar regulations. Critics said government pressure is not enough, a chief reason the Big Three asset managers, as NBER dubs them, got involved.

As a result of the Big Three’s pressure, NBER calculates, women’s average representation on corporate boards increased by 50.2% through 2019. Overall, that translates to the count rising to 19.7% of all directors in 2019, from 13.1% of directors in 2016.

State Street launched its “Fearless Girl” campaign in March 2017, commissioning a statue of a dauntless girl facing the financial district’s iconic charging bull statue . BlackRock and Vanguard followed State Street’s campaign not long after.

The Big Three (they have more than $15 trillion under management and account for 75% of all indexed mutual fund and exchange-traded fund assets) “applied concerted pressure on public companies to add more women to their boards,” NBER recounted.

During the campaign, one standard deviation greater of 2016 Big Three ownership is associated with a 76% increase in the net flow of new female board members and an 11% increase in the overall proportion of female directors.

One measure of this pressure is proxy challenges. State Street’s votes against nominating chairs of companies without a female director increased markedly when the firm began its campaign. Prior to 2017, State Street cast votes against about 20% of such directors. In 2017, this figure jumped to nearly 70% of directors and has remained high since.

The Big Three firms themselves have ample female membership on their boards, although nowhere near half. Of Vanguard’s 12 directors, four are women. Among State Street’s 14 directors, four are women. At BlackRock, five women are on the 20-member board.

Even though Fidelity Investments is not listed in NBER’s research paper, many studies place it in the top three by assets under management, edging out State Street. Other tallies disagree: Lazard, for instance, puts Fidelity in fourth place in AUM. Fidelity has a five-member board, with three women directors (the foremost being CEO Abigail Johnson). It has been involved in activist drives in the past. NBER focused on Vanguard, BlackRock and State Street owing to their well-defined campaigns to further gender diversity on boards.


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