In the past two years the percentage of companies within the ASX300 without a woman director fell from 17 per cent to 12 per cent.
The fund has now committed to voting against a company’s entire nominating and governance committee if it has concerns about the lack of gender diversity and has been unable to engage in productive dialogue.
How do they justify to their members investing in companies that don’t produce the best outcomes because they have no diversity?
Benjamin Colton, vice president and head of Asia-Pacific on the asset stewardship team of State Street, said lack of diversity at executive level was also a concern and ensuring companies had one woman on their board was “just the first step”.
“Diversity certainly reduces the amount of groupthink, it reduces cronyism, it increases innovation,” he said. “And at a time when companies need to be more nimble, and their strategy needs to be innovative we’re increasingly seeing a lack of diversity is a business risk.”
Robin Bowerman, spokesperson for Vanguard, said the index fund would also like to see more progress on diversity.
“Engagement is the first step, engagement with boards and executives there are other options down the track in terms of proxy voting and shareholder resolutions,” he said. “We may support shareholder proposals that seek greater diversity.”
A spokesperson for BlackRock, another large investment house, said diversity was a factor in quality leadership and financial performance but the fund would not pressure companies to improve diversity.
“We are not aiming to direct the nominating process or tell companies what to do,” the spokesperson said.
The move comes after the Chief Executive Women ASX200 Senior Executive Census 2019 published on Tuesday showed just 12 of Australia’s top listed companies have a woman chief executive and identified 17 companies without a single woman in their executive leadership team. In response to questions from The Herald and The Age GUD and Shopping Centres Australasia have subsequently identified women in their teams.
Afterpay was one of the companies singled out for failing to have any women in its executive team and chair Elana Rubin said the business was committed to addressing the situation.
“We are a very young company we are only three years old in the current form and we do believe that diversity is important and our workforce generally has good diversity,” she said.
“We also recognise we need to improve diversity at senior levels, we put it in our annual report.”
Nine of the companies identified as having no women in their executive leadership team were in the mining industry.
Tania Constable, chief executive of the Minerals Council of Australia, said the industry recognised the importance of promoting and supporting women at all levels of the workforce.
Since the late 1990s, Ms Constable said, the proportion of women in the minerals workforce has increased from about 9 per cent to 16 per cent.
“But there’s still more to do. More female role models are needed to inspire, mentor and lead the industry’s growing female workforce.” she said. “As more women take up new roles across the industry, the entire sector needs to encourage and support our female leaders of tomorrow.”
Mining company Perenti pointed to a lack of talent in the industry and the “ongoing challenge in making mining a more appealing career path for women”.
Reserve Bank of Australia board member and gender equality campaigner Carol Schwartz said this was not a reasonable explanation.
“It is just not true,” she said.
She called on companies to be more creative in their recruiting so they looked beyond direct industry experience when assessing candidates and instead assessed the skills they possessed.
Ms Schwartz said companies that lacked diversity in their leaderships were underperformers so superannuation funds would also need to be able to explain their decisions.
“How do they justify to their members investing in companies that don’t produce the best outcomes because they have no diversity?” she said.
She said she was sure large investors – such as superannuation and index funds – were pressuring companies to improve diversity in their leadership ranks.
Libby Lyons, director of the federal government’s Workplace Gender Equality Agency, said the business case for gender equality in executive teams was clear.
“Employers need different views and experiences brought to their C-suites and boardroom tables if they are going to improve their profitability and performance,” she said.
Cara is the small business editor for The Age and The Sydney Morning Herald based in Melbourne
Business reporter for The Age and Sydney Morning Herald.