A recent thought piece by communications firm Argyle highlights unique and rigorous company disclosures on the topic of board and executive management gender diversity, taking into consideration the framework provided by State Street Global Advisors, which announced in 2017 that it would start voting against the chair of the nominating committee at companies with no women directors and no clear progress toward that goal. Starting in 2020, State Street will vote against all nominating committees for companies with no women directors. Other large investors such as BlackRock and Vanguard may not be far behind, since both have written about their expectations for diverse boards and greater representation of women in the boardroom.
The Argyle piece, which provides disclosures reflecting each of six points contained in State Street's diversity framework (see below), looked to both US and international reports for key disclosures, especially Canada, where TSX-listed companies have been required to disclose on board and management gender diversity since 2015. Although US companies are currently less likely to make the kinds of detailed disclosures seen below, that may change quickly given investor focus on the topic as well as strong interest within senior leadership teams and boards generally.
Featured examples include:
Assess Current Diversity. HSBC tracks the growing percentage of women in senior management toward their goal of 26.3%. It's worth noting that the goal is not 50%, reflecting the same difficulties US companies face in developing female representation at the highest levels of the company.
Establish Goals. Telstra has made a commitment to 40% female representation on the board and discloses objectives and progress on a variety of diversity measures for the company as a whole. Requests for this type of disclosure seem likely to increase over the next two years, particularly through activist investors such as Arjuna Capital.
Identify "Champions." Coca-Cola identifies its new Board Chairman (outgoing CEO Muhtar Kent) as its diversity champion; the letter from the outgoing chair in this year's proxy stated the board's commitment to increasing the diversity of its nominees.
Address Biases. Suncor Energy disclosed that it delivers unconscious bias training to all leaders and regularly assesses barriers to the advancement of women into senior positions. This is an example of initiatives that already exist at many US companies but which have not typically been elevated to the level of proxy disclosure.
Consider Female Directors for Leadership Positions. Manulife Financial disclosed that it created an internal networking group called Global Women's Alliance and provided each chapter with an executive sponsor to increase exposure and impact.
Enhance Investor Communication. Unum Group and Rite-Aid both discuss gender diversity efforts with clarity and frankness in their disclosures, including Unum's commitment to 27% female board representation and Rite-Aid's explanation of the challenges of balancing gender and ethnic diversity on the board.