edelmanlogoIRmagEdelman 2017 Trust Barometer Special Report: Institutional Investors captures insights from a powerful group of global institutional investors. It provides the results of their research, completed in partnership with Ipreo, which surveyed chief investment officers, portfolio managers and buy-side analysts across 14 countries whose firms collectively manage more than $1 trillion in assets using various investment styles.

IRmag

Evidence of the links between returns on investment and companies’ CSR/ESG efforts is mounting exponentially, and it’s now clear: ESG is no longer just a fad. We’ve seen increasing research that outlines asset managers’ expectations of issuers, as well as data demonstrating the effectiveness of a robust CSR program and its positive impact on consumers, investors and other constituencies.

ISS Governance

Wherefore Diversity?

Board diversity has become a key priority for some of the largest investors in the world, since it serves as a measure of a board's openness and inclusiveness. Ultimately, boards and investors want to make sure that that the board nomination process is robust, and takes into account the most qualified candidates representing the market that the company serves. Therefore, lack of board diversity and lack of board renewal can only be seen as potential symptoms of a problematic nomination process. The end goal remains to have a qualified, engaged, and competent board. As such, a review of board compos ition from a diversity lens may help facilitate more in–depth discussions about the qualities a company seeks in its directors, and the process it uses for identifying the right members for its board.

Improving board diversity and board renewal can also help improve the overall skillset of the board. The timing for evaluating board composition from this perspective could not be more appropriate . Director skills relevant to some of the most pressing issues for boards today may be in short supply. A review of ISS Analytics data of Russell 3000 companies shows that risk management, government relations, academia, human resources, and social responsibility are the five least commonly cited director skills. At a time when cybersecurity, changing regulations, workplace misconduct, and climate change appear to be on the top of the agenda for investors and boards alike, many U.S. boards may be ill-prepared to face these challenges.

 

SSRN radius1The push for gender diversity on public companies’ boards has been gaining traction. Advocacy groups, institutional investors, regulators and companies themselves have all recognized the need for more diverse boards. However, gender parity is still absent from most public companies’ boards, and a significant number of companies still have no women on their boards.

... These companies clearly understand that board diversity is not a social issue, but is about improving their companies’ performance and enhancing their long-term sustainable value.

Mary Hartman Morris, Investment Officer, CalSTRS
Co-Chair Thirty Percent Coalition's Institutional Investor Committee.

 

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