International Women’s Day 2022 is an opportune moment to stress the importance of equality and inclusive growth and its role in our Global Sustainability Strategy.
As set out in the strategy, equality and inclusive growth are part of our forward-looking perspective. As a long-term investor, one of our aims is to encourage companies to provide greater opportunities for women at all levels of business and to allocate capital to those that do offer women greater opportunities.
We do so in the belief that gender parity has a fundamental bearing on whether economies and societies thrive. Since women make up one half of the world’s talent, it makes great economic and business sense to make the most of that.
This stance resonates with the World Economic Forum’s Global Gender Gap Report 2021, which emphasises gender parity. It notes that the impact of the Covid-19 pandemic means that it will now take longer to close the gender gap around the world. It says that ways to work towards closing the gap include managerial practices that embed sound, unbiased hiring and promotion practices.
Why does board diversity matter?
We believe diversity is a source of financial outperformance and sustainable value creation. Many studies have shown that having women on a board of directors is good for business.
As an example, Harvard TH Chan School of Public Health says: “When Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile… reported a 42% greater return on sales and a 53% higher return on equity.”
And yet, female board representation remains far from parity in many countries. The average percentage of women on boards ranges from 44% in France to just 12% in Brazil. .
Dialogue and voting in favour of women
Since 2019, our voting policy has explicit provisions on gender diversity, meaning we oppose all male director candidates if there are no women on the investee company’s board worldwide.
We require a minimum threshold of 30% of women on the boards of companies we invest in based in Europe, North America, Australia and New Zealand. In addition, we have started communicating our expectations for the future by setting a 40% target for these jurisdictions by 2025.
Alongside voting, we seek direct dialogue with those companies that do not comply with our voting policy. In 2021, we held discussions with 36 companies; 13 subsequently adopted changes in line with our voting policy requirements.
We believe investors have a crucial role to play in increasing levels of female board membership, through both voting and increased dialogue with companies.
Walking the talk – Critical to success
BNP Paribas Asset Management has conducted a global study of the number of women on boards ahead of the 2022 AGM voting season.  It compares the 3 500 companies in which we invest with the 17 000 listed companies in the Institutional Shareholder Services (‘ISS’) database.
The study shows the effectiveness of our voting policy and shareholder dialogue, finding that:
- Women make up an average of 25% of the boards of the companies in which we invest, compared up from 18% for the broader universe of listed companies.
- Regional differences are considerable, with Europe, South Africa and Australia the most advanced in terms of board director parity; Asia, South America and the Middle East are less diverse.
- Company size, country of incorporation and local regulations significantly impact the levels of female board membership and are key factors for investors to consider.
We also believe ‘walking the talk’ is critical to our success. That is why we have made gender diversity a central pillar of our approach to corporate social responsibility.
The investment industry has lagged other professional services industries when it comes to gender diversity, so we have set targets for a more gender-balanced business: 40% women in senior management positions and 50% women on our fund and operating company board positions by 2025.
As of the end of 2021, we had achieved 33% and 44% respectively. To help increase this number, all members of our executive committee now have a gender diversity goal in their performance objectives.
We wish women around the world a safe and sustainable International Women’s Day, and we will continue to do our part – as future makers – to push for improved gender diversity on the boards and management teams of companies around the world.
 Data from the BoardEx Global Gender Balance Report; source: https://www.boardex.com/2020-global-gender-diversity-analysis-women-on-boards/
 The study was carried out in August 2021, at the end of the AGM season, and covered 92 countries.