Perhaps one of the most hotly debated corporate governance issues in recent times has been the issue of quotas to boost the number of women on boards. While countless studies have demonstrated the importance of gender diversity in fostering better decision-making, and therefore better performance, many corporate regulators have avoided imposing mandatory quotas outside of key European markets.
As corporates are buffeted by market turmoil globally, governance issues will no doubt be front and centre in the aftermath of the Covid-19 pandemic.
Recognising the important role of stewardship in driving strong governance, BNP Paribas Asset Management has gone a step beyond its 2019 proxy voting policies, which mandated voting against all directors on boards without at least one female director.
From this year, BNP Paribas Asset Management now expects that all corporate boards in North America, Australia and New Zealand will have at least 30 percent female representation, or proxy votes will be directed against their directors.
Under certain conditions, the asset manager could support boards that have a ratio between 20 percent and 30 percent of women, for example, if the company has made significant improvements in recent years, or if it commits to reaching 30 percent in two years' time.
" The ongoing use of a gender-specific term for the most senior board position is not only puzzling and illogical; it is unjust and impedes progress towards diversity. ""We analyse such companies to check if they respect these conditions, and we will engage with some of them in collaboration with our investment teams. We will systematically vote against male directors on boards where there are fewer than 20 percent female directors," explains Jane Ambachtsheer, Global Head of Sustainability at BNP Paribas Asset Management.
Many studies have shown that having women among a board of directors is good for business. The Harvard TH Chan School of Public Health research states: "When Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile reported a 42 percent greater return on sales and a 53 percent higher return on equity."
Language matters tooLanguage plays an important role in 'nudging' mind-sets, with Ms Ambachtsheer advocating for replacing the use of the title 'Chairman' with the gender-neutral 'Chair'. Titles help to shape societal norms and influence our perception of who is best suited to fill a role.
Ms Ambachtsheer stresses that: "The ongoing use of a gender-specific term for the most senior board position is not only puzzling and illogical; it is unjust and impedes progress towards diversity."
We are exploring how to use the hashtag #JustChair to establish a global campaign to drive positive change on this simple yet powerful item.
Walking the talkBNP Paribas Asset Management's Global Sustainability Strategy defines our sustainable investment beliefs and 'walking the talk' is critical to our success. That is why the entire BNP Paribas Group has made gender diversity a central pillar of our approach to corporate social responsibility.
The investment industry has lagged other professional services when it comes to gender diversity, so in 2019, BNP Paribas set an aggressive ambition of having women in at least 30 percent of senior positions.
Today, over 35 percent of the fund and operating company board positions at BNP Paribas Asset Management are held by women. But there is much more to be done.