With recent setbacks to the advancement of women’s rights, it’s more important than ever for investors to help ensure that American companies continue their push toward gender equality.
Investors have engaged with companies to encourage more gender diversity on boards for years. While we see board gender parity on only 9% of Russell 3000® boards, we’ve witnessed significant progress over the years. In fact, women hold about 30% of board seats at companies listed on the Russell 3000, up from 17% a mere four years ago. As investors continue their efforts on boards, they’re focusing more attention on the diversity of companies’ senior leadership. At the highest level of management, only 15% of CEOs at Fortune 500 companies today are women. While that’s a tenfold increase from 2002, it’s still a far cry from parity.
A growing number of investors are not only talking to companies about board diversity but also taking a more critical stance by voting accordingly. In the past five years, since the Fearless Girl sculpture first made its appearance on Wall Street, it’s become common for asset managers to vote against directors when the board lacks diversity. Each manager defines their own tolerance level for the lack of diversity on a board, but it isn’t unusual now to see asset managers voting against directors when they see less than 2% or even 30% of women on the board.
The bottom line
Despite notable advances for the rights of women over the last century, more work remains to be done. Investors can help encourage progress within the companies in which they invest. This can be done either by voting for proposals and engaging with management to prioritize gender equality or by investing with managers who do this important work on their behalf.
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