January 27, 2016
Rana Abdel Fattah
BLOOMBERG: Institutional Investors Push for Board Diversity
We recently came across an interesting read on Bloomberg Business, which discusses the lack of gender and racial diversity amongst board members across North American. Below, we share some highlights from the article that indicate how greater board diversity and transparency are factors that the institutional community is pushing for and how an increase in board diversity can influence institutional investment decisions.
The author, Laura Colby, starts off by noting that the issue of board diversity is becoming an important issue in the minds of investors. In 2012, institutional investors that controlled a combined $417 billion in assets in the U.S markets noted that board diversity was a contributing factor to their investment decision. Two years later, the number of investors grew, with $578 Billion worth of asset holders that echoed the sentiment. Clearly, this is an important issue to a large portion of the institutional community.
Moreover, investors are increasingly demanding that companies add more women to the board.
Colby goes on to note that this topic has been widely discussed since 2012 – when the 30 Percent Coalition, a group that seeks to have women make up 30% of board members, began insisting that companies address the lack of board diversity. The Coalition led a campaign that saw 168 letters signed by institutional investors who oversaw $3 trillion in assets demanding fairer representation. The result: by last October, 62 of the 168 companies that were approached had already appointed women to the board. Companies included: Delphi Automotive, Freeport McMoRan Inc., and Under Armour Inc.
Click here to read the entire article on Bloomberg Business, and share any thoughts you have using the comment box below.