'Hawkish' shareholders want gender diversity, says BlackRock boss
BlackRock, one of the world's largest institutional investors, says shareholders are getting more hawkish in insisting on gender diversity on boards and senior management roles.
Pru Bennett, BlackRock's head of corporate governance and responsible investment for Asia Pacific, told the New Zealand Institute of Directors conference in Auckland today that there was a raft of research showing those boards with greater gender diversity outperform those that don't have it.
"From an investor perspective, that's what we're interested in," she said.
New Zealand and Australian companies also had work to do on improving the number of women in senior executive roles, Bennett said. In both countries women make up more than 50 percent of graduates but constitute only around 20 percent of senior executives.
"What has happened to that talent? We have a leaking pipeline of talent and companies are not managing the talent they have well," she said.
BlackRock released its third report last year on gender diversity after studying the 2013 annual reports of Australia's 200 largest ASX-listed companies, some of which were New Zealand-based.
It found while underlying gender diversity on boards had risen from 14.4 percent in 2011 to 21 percent in 2013, the level in very senior key management personnel remained low at around 5.6 percent. That compares poorly with countries like Hong Kong, where the level is 13 percent.
By comparison, NZX's gender diversity statistics for 2014 recorded 14 percent of women directors on listed companies, 3 percent up on the previous year.
BlackRock's report concluded that corporate commitment to gender diversity policies was piecemeal and there was a "yawning gap" of awareness over new standards introduced by the Australian Securities Exchange.
Hong Kong-based Bennett, who spent 12 years at one of Australia's three proxy voting consultancies - CGI Glass Lewis - said such consultancies could recommend to their clients to vote to eliminate chairmen of boards where diversity is not being addressed.
"In the US shareholder proposals have been quite prolific and of those that have been put forward on diversity, 37 percent have had shareholder support," she said.
Bennett said shareholders were looking for four key things in listed companies' disclosure on this issue: the right culture with the chief executive and chair driving the change to create value rather than simply meet compliance requirements; what companies were doing to improve talent management and getting diversity in the senior ranks to reflect the graduate intake; the governance of gender diversity policies and who was being held accountable for change; and what they were doing about the pay gap, with a 17 to 18 percent gap in Australia between male and female pay.
Statistics New Zealand's 2014 Income Survey showed New Zealand women earn 86.1 percent of men's earnings, a gap of 14 percent. That was down from 87.3 percent in June 2013.
Bennett said diversity other than gender was also important at board level, including age and ethnicity. Her research of Australian listed companies had shown it was a myth that boards were dominated by accountants and lawyers.
She found they constituted less than 20 per cent of the ASX200 boards, while 65 percent had been chief executives or senior executives of ASX200 companies, and many had engineering backgrounds reflecting the importance of the mining industry in Australia.
Bennett also praised the IOD's Mentoring for Diversity programme, which has seen 75 women intern on boards to gain experience, since it began three years ago. This year the programme has been expanded to promote board diversity in a wider sense, with the latest intake considering ethnicity, age, skillset and background, as well as gender.