Global asset management firm AXA IM announced this week that it will become increasingly active in promoting gender diversity through its investment portfolios with an expanded voting policy. With over €800 billion AUM, and an active long-term investment profile, AXA IM can exert significant pressure on companies to improve their governance standards and practices through such policies.
AXA IM has already engaged with developed market economies on gender diversity issues, but is now introducing a 33% diversity target for companies in these markets.
AXA IM also announced that it will begin targeting boards in emerging market economies, and in Japan, where the Board of Directors does not comprise of a minimum of one female director (or 10% of the board for larger Boards).
The new targets introduced by AXA IM represent an aggressive push for gender diversity on boards, an area in which many companies lag. According to research firm, Equilar, for example, at the end of Q1 2020, women represented on 22% of all board members of Russell 3000 companies. It has been less than a year since the S&P 500 lost its last all-male board.
AXA IM stated that it will continue to push all companies, in both developed and emerging markets, to disclose and report against their executive committee gender diversity policy and targets. The firm will hold companies accountable with respect to these targets and will seek to put pressure, through its engagement efforts, on companies that continue to fall short of their defined target or market best practice to explain shortcomings and how they intend to address the situation.
AXA IM said that it may also use its voting power at a company general meeting as a tool to address concerns at companies that fail to provide appropriate disclosure and measures on executive committee diversity and have no credible plan to address the topic.
AXA IM has already been active on this front, voting against 245 companies in 2019 on gender diversity issues, and 230 companies so far in 2020.
Yo Takatsuki, Head of ESG Research and Active Ownership at AXA Investment Managers, said:
“Studies show that a well-balanced and gender-diverse Board of Directors leads to higher profitability and value creation, overcomes issues of group think, triggers debates and innovation, and leads to stronger diversity of representation across the organisation. These changes are in line with our belief that we must hold Boards of Directors accountable to best governance standards in their role as guardians of sustainable performance. The introduction of our 33% target for listed companies in the developed world and new policy for companies in emerging markets and Japan, is the next critical step for us as we continue to build on our voting policies around gender diversity, and make the most of our rights as an investor to engage companies in productive dialogue that makes a tangible difference.”
Yo Takatsuki, added, “As long-term stewards of our clients’ investments, we believe that the interests of shareholders are best served where the Board of Directors is structured in a manner to ensure that there is an appropriate diversity of skills, knowledge and experience amongst the directors on the board which is suitable for the requirements of the business.”