From David Cameron’s Cabinet down, female representation in the workplace is slowly but surely being taken seriously at the highest level.
“It is not gender politics sticking its nose in, there is a really strong case for having the best talent at the top, regardless of whether it’s a man or a woman.”
Abigail Herron
Female board representation at blue chip companies has been on the agenda among UK investors some time now. It was thrust into the spotlight in 2011 when Lord Davies’ government-commissioned Women on Boards review revealed FTSE 100 boards comprised 87.5% men and just 12.5% women. This led Davies to set a target of 25% female representation at FTSE 100 firms by 2015 – and as of May this year 62 companies still needed to appoint one woman or more to reach this target.
But some progress has been made since Davies’ initial report with women now accounting for 21.6% of overall FTSE 100 board directorships – up from 17.3% in April 2013 and 12.5% in 2011. In June this year, a real milestone was reached when the last FTSE 100 company without female representation on the board, mining firm Glencore Xstrata, appointed Canadian Patrice Merrin as a non-executive director.
Closer to home, Mercer recently appointed Jane Barker, Siobhan Martin and Martine Ferland to its UK board, which along with the inclusion of chief executive Fiona Dunsire, now comprises four women and three men.
Elsewhere, Aviva Investors head of engagement Abigail Herron has noticed a marked improvement in the reception she has received from company chairmen on the issue. Back in 2008, some looked like a “rabbit in the headlights” when quizzed on their boardroom diversity strategy, she claims, but this has improved.
“It has been amazing the quality of question response you get,” Herron says. “Now chairmen will prepare for that type of question and they have definitely been briefed on it. There has been progress but it is definitely not time to take your foot off the gas.”
Indeed, there is still room for improvement both within and outside the FTSE 100. According to the latest update to the Davies review published in March, women accounted for just 231 of the 1,117 FTSE 100 board positions, while at FTSE 250 level female board representation stood at 15.6%, up from 7.8% in 2011 and there remained 48 all male boards.
Asset owners, managers and employer groups have all supported the aspirations of achieving more balanced boardrooms. In the UK the movement has been spearheaded by the 30% Club, which has a target of 30% women on FTSE 100 boards by the end of 2015.
Employers have also backed the campaign, with the Confederation of British Industry (CBI) approving a target of 30% female representation at its events and in its policy-making processes, on a comply-or-explain basis.
Similarly, the Local Authority Pension Fund Forum (LAPFF), which represents 60 local authority pension funds in the UK, announced it would take board diversity into account in AGM voting recommendations, stating it would ” directly raise concerns where there is insufficient indication that the company has taken diversity into consideration.”
LAPFF is one of 20 institutions to make up the membership of the 30% Club Investor Group. Emma Howard Boyd, who leads the Group, believes there is a clear role for asset owners in this campaign. “As a pension fund you can ask your fund managers to act on your behalf. This is something the LAPFF has done in terms of some of the policies it has announced and letters it has written to its fund managers,” she says.
But why is a balanced boardroom relevant to asset owners?
“You are missing out on 50% of the talent pool if you do not have a diverse business,” says Howard Boyd. “Our initial work was focusing on boards and to an extent that is something you can work on relatively quickly, a large part of our work now is how you can get better representation of women throughout businesses and that takes longer to achieve.”
Aviva Investors’ Herron adds: “It is not gender politics sticking its nose in, there is genuinely a really strong business case for having the best talent at the top regardless of whether it is a man or a woman. If you are a company and have a very non-diverse board how do you know what the person who was not at the table would have said?”
But if the process is glacial in its pace of change, why not simply enforce quotas, as called for by the Trades Union Congress (TUC) in April last year?
Speaking at the time, TUC director general Frances O’Grady said: “The only way we will end the old boys’ network is if the government introduces compulsory quotas for the composition of boards, as recommended by the European Commission.”
However, Howard Boyd says the 30% Club is “absolutely against” quotas, preferring “aspirational targets” as a way of generating change. “If you set it out to meet a target on a comply-or-explain basis then businesses will start delivering change and that has started to happen,” she explains. “We have seen announcements from high profile companies that they have applied the same sort of focus to numbers of women in senior executive roles. It allows someone to feel like they have got there on merit as opposed to a quota where it is mandated by law.”
She adds: “It would be great to see the Davies target met. This is all about producing a sustainable way of dealing with the problem; you have to focus on the percentage of women in senor executive roles.”
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