The majority of institutional investors aren’t concerned about female representation at board level and don’t want regulator-imposed diversity criteria, according to a report from fund manager Hermes.
Its latest Capitalism Survey found that under a quarter of investors believe female representation at board level was important, despite high-profile campaigns on gender diversity.
The results of the study of 109 UK and European institutional investors were, Hermes said, supported by a number of industry reports that indicate while perceptions may be broadly changing on gender diversity, there are still significant gaps in pay and board representation.
Harriet Steel, head of business development, Hermes Investment Management, said: On the surface, the corporate world is making great strides in improving its record on diversity. There are greater numbers of women and ethnic minorities in increasingly senior positions.
She pointed out that even in male-dominated sectors, such as financial services, some of the most important leadership positions US Federal Reserve chair, managing director of the IMF, head of the US Securities and Exchange Commission are now held by women.
Yet she warned the Hermes report showcased a less encouraging outlook, with 23 per cent of institutional decision-makers placing importance on gender diversity at board level.
the results are disappointing and show there is some way before the glass ceiling is cracked in the boardroom and on issues of pay. There have been a number of high-profile campaigns to improve the diversity on boards, notably from groups such as the 30 per cent Club.
She added that while the campaigns had achieved ‘some progress, it was evident UK plc is still poorly diversified at senior management level.
Hermes found the overwhelming majority of those surveyed weren’t in favour of any regulator-imposed diversity criteria, with 19 per cent supportive of regulatory change at senior management level.
Steel said the argument for diversity didn’t just come down the better management of risk, but also in terms of contribution to overall returns. A January study by McKinsey & Company found that businesses in the top quartile for gender or racial and ethnic diversity weremore likely to have financial returns above their national industry medians.
the main goal of board independence and diversity of experience is not simply to tick a corporate governance box. It is to avoid the pernicious and value-destroying practice of ‘group think’, Steel explained. The perils of this type of culture have been seen in corporate scandal after corporate scandal. It may be convenient for the members of a board to think in the same way, but it is rarely good for business.