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Mar 13, 2017

Vanguard of the movement: An interview with the 30% Club

Deborah Gilshan tells Andrew Holt about the challenges facing the group

Deborah Gilshan is head of sustainable ownership at Railpen Investments and a member of the steering group at the 30% Club, the body that wants to see all FTSE 100 company boards comprising 30 percent female membership. 

Recent IR Magazine research reveals that while women are about equal to men in the IR profession in terms of numbers, two thirds of senior positions are held by men. How do you explain this? How can this be addressed?

This is just reflective of, and consistent with, the lack of senior women at the top of all types of organizations, especially in the financial services industry. The persistence of the wide imbalance of gender representation is a human capital issue for all companies and their investors to be concerned about. 

What did you think of the UK government’s green paper on governance issues published at the end of last year? Did it go far enough?

We are encouraged by the focus on diversity in the earlier BEIS Select Committee inquiry and the government’s green paper on corporate governance. For us, diversity transcends corporate governance considerations and is a key business imperative. But the focus on it allows us to demonstrate what investors are doing through the work of the 30% Club investor group in their stewardship work and in maintaining the spotlight on this issue as a key pillar of long-term and sustainable businesses that reflect the societies in which they operate.  

We have also launched a Statement of Intent for investors to sign up to and held an event at the London Stock Exchange in October 2016 with CEOs of asset owners and asset managers as well as regulators and other stakeholder bodies to demonstrate the importance of the investor voice in the diversity debate. 

One of the members of the investor group is Legal & General Investment Management (LGIM), which has been voting against company chairs for lack of diversity since last year. Clare Payn, LGIM’s head of corporate governance for North America, leads the firm’s work on diversity and says: ‘Even though most FTSE 100 companies have reached the previous Davies Report target of 25 percent of women on their board by 2015, we are not softening our stance and continue to hold companies to account on this issue. 

In 2016 we voted against 12 chairs of FTSE 350 companies for lack of progress on diversity. LGIM fully supports the new targets set out in the Hampton-Alexander Review, and our principles will strengthen over time, as we expect all boards in the FTSE 350 to be 30 percent female by 2020.’

What views have you submitted to the government? And what do you expect from the government? 

We submitted a response to the earlier BEIS Select Committee inquiry into corporate governance. All investor group members were also encouraged to raise gender diversity in their submissions to both inquiries. 

Do you fear that many financial organizations accept your aims verbally, but will do very little in reality over the long term?  

Not at all. We see a growing recognition of the value of better gender balance in investee companies, in the wider asset management industry and in the pension scheme industry. Initiatives like the Women in Finance Charter, the Diversity Project and the Pensions and Lifetime Savings Association (PLSA) initiative on Breaking the Mirror Image and harnessing talent through diversity for better pensions support this view. 

Chris Hitchen, CEO of Railpen and former chair of the PLSA, says: ‘Cognitive diversity is vital for the strategic thinking we need from companies and investing organizations in order to pay pensions securely, affordably and sustainably into the far future.’ 

The 30% Club has been in the vanguard of this movement since we began to raise this issue in 2010 and the issue very quickly became a business and operational performance imperative. The conversation and debate has firmly moved on from the ‘why’ to the ‘how’. 

We also recognized from the beginning the role of men in the solution to addressing gender imbalance. That is why our strapline is ‘Men and women working together for real change’. In addition, for the 30% Club investor group, key strategies have been:

• Collaboration with others to encourage investee companies. Statement of Intent launched as we believe better diversity will ultimately lead to better performance
• Measurable goal and defined timetable 
• Supportive public policy ‒ we have had government reviews, including the current Hampton-Alexander Review with a focus on diversity in the executive pipeline, as well as the earlier Lord Davies review into women on boards, and the threat of legislation
• Change driven by those in power. Not about fixing women or bashing men
• Collaboration
• Consistent, concerted action. 

Progress is encouraging and statistics from BoardEx and the Female FTSE Board Report show that: 

i. In the FTSE 100, 33 companies have already reached 30 percent – there are 31.4 percent women non-executive directors and no all-male boards
ii. In the FTSE 250, 52 companies have already reached 30 percent – there are 25.7 percent women non-executive directors and 13 all-male boards, down from 131 in 2010.

What will be the benefits to investors and the financial world in general of having boards comprising 30 percent women?

Intuitively, it makes sense that diverse groups will make better decisions and will lead to better financial performance over the longer term. The following eight studies, based on different geographies and with a specific focus on gender diversity, support the intuitive view that diversity at board and management levels improves financial performance:

• Petersen Institute: Is Gender Diversity Profitable? Evidence from a Global Survey (February 2016)
• MSCI Women On Boards: Global Trends in Gender Diversity on Corporate Boards (November 2015)
• Grant Thornton The Value of Diversity (September 2015)
• Credit Suisse The CS Gender 3000: Women in Senior Management (September 2014)
• Credit Suisse Gender Diversity and Corporate Performance (August 2012)
• McKinsey ‘Women Matter’ Series (2011-2014)
• Citigroup ASX100 Women on Board Analysis (August 2011)
• Catalyst ‘The Bottom Line: Corporate Performance and Women’s Representation on Boards’ (2007)