Stalled Progress: The Imperative For Investor Action on Workplace Gender Equity
For many years, responsible investors have been using dialogue, shareholder resolutions and proxy votes to advocate for greater workplace equality. Focusing on increasing diversity on boards and disclosure of diversity metrics and practices, these proposals have seen increasing investor support. For example, Sullivan and Cromwell reports that 2017 vote totals for board diversity resolutions averaged 31 percent support, up from 26 percent in 2016.
However, real progress on the top-level metrics remains slow. In Calvert Research and Management’s 2017 research on corporate diversity, we found that women make up only 23 percent of all S&P 100 board seats, up slightly from 19 percent in our 2013 report. According to the Credit Suisse Research Institute’s tracking of gender issues in 2,400 companies globally, just 16 percent of senior management positions in the U.S. were filled by women in 2016, a marginal increase from 15.4 percent in 2014.
This stalled U.S. progress also extends to broader gender equality measures. According to PriceWaterhouseCoopers UK’s Women in Work Index, the US gender wage gap in 2015 was 18.9 percent, a slight increase from 17.9 percent in 2013. The World Economic Forum's Global Gender Gap Report provides an annual ranking of 144 countries and the U.S. fell from 45th place in 2016 to 49th place in its 2017 report.
Beyond the broad economic argument, the business case for work in this area remains as compelling as ever. Diversity is a key ingredient to success in an increasingly complex global marketplace, where the ability to draw on a wide range of viewpoints, skills, backgrounds and experience is critical to a company’s long-term success. Studies indicate that inclusive corporate culture and diverse leadership can positively affect or show correlation to organizational and financial performance in numerous ways, including innovation, retention, sales, productivity, reputation, return on equity and price/book ratios. The investor case for continuing to press for progress is clear.
The increased attention to diversity is supported by expanded interest in and research about other aspects of inclusive corporate culture and diverse workplaces. A 2017 McKinsey/LeanIn.org study found that while nine out of ten companies report that gender diversity is a high priority, only about half of employees think their employers are doing what it takes to improve and have a high commitment to gender diversity. In 2017, the National Association of Corporate Directors highlighted oversight of corporate culture as a top governance imperative for all boards—specifically identifying leadership development, employee engagement, diversity and inclusion as board level responsibilities.
Investors are also taking a close look at the issue of harassment and bias at companies, mirroring an increased societal focus on this persistent problem. The continued efforts of the Thirty Percent Coalition to coordinate progress on gender equity in corporate leadership are as critical as ever, as is investor action on the related issues of pay equity, disclosure of workplace diversity data and other emerging issues. Calvert plans to continue to deepen our investment research on diversity and use the full investor toolkit to engage with companies on behalf of our portfolios.
Vice President, ESG Senior Research Analyst, Calvert Research & Management