It takes over 135 years to close the economic gap between men and women, calculated the World Economic Forum in March. Previously, the organization thought it would take 99 years, but Covid-19 has raised expectations. This is partly explained by the fact that women are more likely to work in sectors that have been most affected by blockages, while being more responsible for taking care of the family.
The report tracks progress in four areas: economic participation and opportunities; level of education attained; health and political activity. In the report, the World Economic Forum identifies a number of things that will speed up the process, including developing strategies and policies to promote equal hiring practices. Financial institutions can play a role in this regard, says Michael Herskovich, Global Head of Stewardship at BNP Paribas Asset Management. “As an investor, we can drive change by voting. It refers to the voting rights that investors have as shareholders of listed companies at annual general meetings of shareholders. In these meetings, these types of companies are held accountable to shareholders.
How a shareholder can contribute to diversity at the top
For years, BNP Paribas Asset Management has taken diversity into account when voting on the appointment of new directors at shareholder meetings. In 2019, the asset manager enshrined this approach in its policy and actively publicized the voting choices. For example, since 2019, BNP Paribas votes against any male candidate for the post of director if there is no woman on the board of directors of the company in the world.
For Europe, North America, Australia and New Zealand, the asset manager has further strengthened this strategy from 2020: at least 30% of the board must be made up of women. With this in mind, the asset manager votes against the appointment of male directors if the board of directors is not made up of at least 20% of women.
In some cases, BNP Paribas Asset Management is an exception, for example if a company is clearly progressing but is simply not hitting the right numbers. “It gives the opportunity to start a conversation with companies and encourages them to improve. “
In addition, the requirements are lower for some regions. Herskovich, for example, points out that it makes sense to aim for 30% women on boards of Japanese and South Korean companies, but that this practice also plays a role in these considerations. “We need to be more stringent than current practice because we think it’s an important topic. At the same time, we have to find a good balance between being strict and not investing in any business. For example, Japanese and South Korean boards are made up of an average of 6% women. Initially, BNP Paribas Asset Management aimed at at least one woman on the board of directors of Asian and Latin American companies. Now that 80 percent of the companies in which the asset manager invests meet these requirements, he is raising ambitions. Now he’s aiming for 15 percent.
Diversity: socially and financially desirable
Herskovich is behind the diversity approach. “When you have more diversity of origin, gender, nationality, expertise, etc., it offers multiple perspectives and it improves collective decision-making. This is the strong conviction that we have. It is best to take different opinions into account when making a decision. And when there are people from different backgrounds in a group, it’s easier to disagree with each other.
“When you have more diversity, collective decision making improves. “
of a study by the consulting firm McKinsey shows that increasing opportunities for women and other disadvantaged groups is good for the economy. Contrary to fears that economic inclusion comes at the expense of economic growth, our research supports the idea that economic growth is at its best when it is most inclusive. Conversely, inequality and economic exclusion threaten economic growth, ”writes senior consulting firm Bob Sternfels in the report’s foreword. Diversity wins: the importance of inclusion.
Management teams where women represent more than 30 percent of the total have better financial performance on average than those with fewer or no women, writes McKinsey in the report. Herskovich is not surprised by these results. “But it’s always good to have studies showing that.” He hopes that more women on boards will lead to an increase in the number of women at other levels as well. “That this will also help achieve greater diversity within the organization. “
Despite the added value of having more women on the board, there is still a long way to go. It is true that 60% of North American companies respond to BNP Paribas Asset Management’s wish that 30% of directors be women. But by 2025, the asset manager wants that figure to be 40%. “When we’re at 40%, we consider the job to be done,” says Herskovich.
He believes that shareholders, in addition to local governments which enact laws, play an important role in the pursuit of greater diversity. “If more investors adopt this kind of policy, it will accelerate the progress of companies. And we want them to go faster, because there is still a long way to go. Compared to five to ten years ago, there is a great improvement, but we are still far from achieving balance or equality in governance.
Read also the speech by Nicolette Loonen and Marleen Janssen Groesbeek: Bankers and investors must save the world
Act at the word
BNP Paribas Asset Management not only encourages the companies in which it invests to hire more women, but also applies this vision in its own organization. At present, the Executive Committee of BNP Paribas for 30 percent of women. In four years, that should also be 40 percent. Last month, employees took a mandatory diversity course. “So that’s really part of our strategy. Not only as an investor, but also in the company itself. The reason why we seek diversity therefore also applies to our own behavior.
Also read Lynn Zebeda’s interview, which impacts her business at the intersection of climate change and social inequality. “I strive to have an approach that recognizes differences and lived experiences, but makes no distinction, even in the boardroom.”
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