Si2 Briefing Paper 2018 – Governance – Board Diversity

SustainableInvestmentsInstitute waldenTSInvestors have been interested in boosting the number of women and minority directors at companies for many years and won a new requirement for disclosure on the subject in 2009, but despite efforts since to make that requirement more specific, the Securities and Exchange Commission (SEC) has not acted further.

This has not deterred an expanding array of support for more board diversity, however. In the last year, what may be a critical mass of supporters has grown to include major mainstream financial market players, including leading mutual funds that have joined longer-term proponents of reform from the world of public pension funds and socially responsible investors, as well as leading companies and the National Association of Corporate Directors.

Shareholder proponents ground their support for more diverse boards in research findings that show greater diversity seems to contribute to better bottom-line financial performance. Yet U.S. companies are far from reaching gender equity on boards, which remain largely white and male. Representation has grown from 8.3 percent in 1997 to about 16 percent at present, but the latest estimate suggests it will be 2048 before women hold half the board seats at U.S. companies.

This year is a high-water mark for shareholder resolutions that seek either corporate policies to encourage board diversity or reports on progress towards this goal. As of late March, 15 resolutions were still pending and proponents had withdrawn a further 19 proposals

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