The corporate role in assisting in the fight for gender equality is being increasingly recognised as a crucial one. Internationally women continue to be discriminated against in policy and legislation, as well as through social norms and entrenched gendered stereotypes. As these pervade the labour force and corporate world, the empowerment and protection of women in business is an essential component required for addressing wider issues of inequality, poverty and the SDG 5 on Gender Equality.
Investors are increasingly expecting companies to have policies, frameworks and measurement tools in place to actively ensure their operations across all levels are contributing to the fight against gender inequality, starting in the board room.
In July, we engaged with all our portfolio ASX 200 companies who are yet to achieve the 30% female board representation target set by the “30% Club Australia”, in partnership with the Australian Institute of Company Directors. We wrote to 12 portfolio companies, to strongly encourage them as shareholders, to accelerate their attention and progress towards this goal. We have had pleasing responses from several, and we will continue to advocate more deeply on this issue with all these companies over the coming year.
We know that the shareholder voice is a powerful influence, and we believe it is both a privilege and a responsibility to use our advocacy in this issue.
Pleasingly, this was the second round of engagements we have had with portfolio companies on this target, and we can report that one of the companies we engaged with on this issue last year, whom had no women on the board, is now in the process of appointing two women board members.
We also know, as shareholders, that there is a positive business case for increasing gender equality, with increasing amounts of research showing that companies with greater diversity on their boards are best placed for decision making and governance. Greater diversity also fosters innovation and growth, translating to better financial performance. For example: A 2019 Morgan Stanley research study found that globally, “companies that have taken a holistic approach toward equal representation have outperformed their less diverse peers by 3.1 per cent per annum over the past eight years”. Importantly, The Harvard Business Review (2019) also found that boards with female representation were more likely to better broach new strategies addressing climate change risks, evidencing more innovative decision making. Clearly, as ESG investors, if we want to deal with climate change and inequality, we need to start with addressing gender.
Thankfully, the seriousness with which investors are now viewing the issue is escalating, which can be seen in investor voting policies – for example, Australian Super has a policy of voting against all directors on boards without at least one woman. In addition, this year, BNP Paribas announced they will be “systematically vote against male directors on boards where there are fewer than 20 percent female directors” and only conditionally voting with boards that have a ratio of between 20 and 30 percent, if the company can establish they are committed to reaching the 30 percent threshold within two years.
But we also acknowledge that this is just the start of addressing the gender equality issue.
In June, the UN released the 'SDG Ambition: Introducing Business Benchmarks for the Decade of Action' United Nations Global Compact Initiative. The benchmarks aim to create a clearer framework for businesses to measure their progress and impact in transitioning to a comprehensively sustainable business model.
For SDG 5, gender equality, the business benchmark that has been chosen is attaining gender balance across all areas of management, so it is clear that gender balance on the board is only the beginning.
It also needs to extend to the gender balance of executives, managers and employees, and right through to the working conditions, unequal pay, leave provisions, childcare, and other issues that face women in the workforce today. It also requires that companies are aware of the increasingly documented disproportionate gendered effects of COVID on women, and their employment.
It is known that, prior to COVID-19, if the pace of change implementation had continued, it would already have taken 257 years to close the economic gender pay gap. The effects of the pandemic have caused this gap to worsen and set this timeline back even further.
The economic impact of the virus has meant women have been disproportionately affected by job insecurity and a greater reduction in working hours in comparison to men. It is also causing the superannuation gap to widen with more women withdrawing from their super savings accounts than men. These factors are exacerbating existing gendered inequalities and placing women at a larger risk of falling into poverty. COVID has also disproportionately affected women not only in economic terms but also in relation to health, social protection and security. Many of the COVID response workers on the frontlines work in female dominated industries and the unpaid care work looking after children has increased due to closure of schools. Domestic violence response services have also experienced a spike in frequency and severity of violence perpetrated against women.
And finally, as for addressing the SDG’s as a whole, an issue of serious focus for us at Ethical Partners, it is clear that gender equality sits at the root of the solution to most, if not all of the SDG’s. It is also very clear that implementing a gender lens will be required to actively tackle SDG (1) No Poverty, (2) Zero Hunger, (3) Good Health and Wellbeing, (4) Quality Education, (8) Decent Work and Economic Growth, (10) Reduced Inequalities and (13) Climate Action.
This is because it is well known in development circles, that where women are empowered, whole communities are more likely to thrive – and given the risks to women’s economic and social wellbeing posed by COVID, addressing these issues are now more relevant than ever.
Therefore, both as part of our recent engagements with our portfolio on board gender balance, we at Ethical Partners will be encouraging companies to more aggressively look at their gender equality within their operations and engaging more broadly on some of the other practices companies can be implementing as a commitment to supporting gender equality, such as:
• The introduction or updating of flexible working from home and parental leave policies for both male and female employees to enable a more even distribution of care work;
• Consideration or offering of childcare services;
• Keep sexual harassment policies updated and ensure there are viable complaint and formal investigation processes in place – and as evidenced by recent high-profile harassment allegations, this is particularly pertinent to the finance industry, which is one of the worst industries for gender parity;
• Implement the Workplace Gender Equality Agency (WGEA) Toolkit to audit and take steps to reform implicit gendered challenges under its 17 focus areas and apply them all the way down the supply chain.
We look forward to sharing the results of these engagements with you over the coming year.
