The importance of board diversity intensified during 2012, not least because of the changes to the UK Corporate Governance Code and the potential threat of EU legislation imposing quotas upon companies to reach female board representation of 30%.
For us, the issue of board diversity started long before 2012, and we published an article discussing the benefits of all forms of board diversity in our ‘Fundamentals’ series, called ‘Healthy Debate’. Also, during 2011, the 30% Club set up its investor group. In this, a group of investors worked together to help co-ordinate the investment community’s approach to the issue, and we were one of the first UK investors to join. We submitted a response to the FRC consultation on gender diversity on boards, as well as helping the 30% Club shape its response.
In February, on the anniversary of the Davies Report, the 30% Club hosted its first event, which discussed ‘Board Effectiveness: Why Diversity Matters’. The event was attended by 150 delegates from the investor community which enabled diversity on boards to be discussed more widely. Our director of corporate governance presented the investor view on a panel alongside the Chairmen of Centrica and Marks & Spencer, and Baroness Hogg, the Chairman of the Financial Reporting Council.
We have been focusing on tackling the problem of ‘the pipeline’ and asking companies to start encouraging females who sit on the executive committee to get board experience outside of the company. We have also been engaging with head-hunters in order to ensure that they expand the pool of candidates they look at.
We had 425 meetings with companies this year. At many of these we discussed board diversity, so it is a discussion, which is part of our regular meetings. At the end of 2012 we also embarked on a collaborative project with two other 30% Club investor group members to target some FTSE250 companies. The aim of which is to understand their initiatives in this space as these smaller companies are lagging the FTSE100 in terms of commitment and progress.
This is our (Download PDF:) published view on company diversity (PDF).