Exclusive: Norway wealth fund tells firms: put more women on your boards

February 15, 2021

By Gwladys Fouche

OSLO (Reuters) – Norway’s $1.3 trillion sovereign wealth fund, the world’s biggest, wishes the companies it invests in globally to strengthen the variety of women on their boards and to think about setting targets if much less than 30% of their directors are woman, leading fund officers informed Reuters.

1 of the world’s largest buyers, the fund holds stakes in all-around 9,200 corporations throughout the world, proudly owning 1.5% of all outlined shares. It has set the speed on a host of difficulties in the environmental, social and corporate governance (ESG) subject.

Boards exactly where possibly gender has less than 30% illustration should take into consideration setting targets for gender range and report on progress, the fund stated in a situation paper shared with Reuters in advance of its publication later on on Monday.

“We may phrase it politely, but it is pretty apparent what we imagine,” Chief Executive Nicolai Tangen claimed in an interview.

“What we want to see is better illustration of girls on the boards,” included Carine Smith Ihenacho, the fund’s main governance and compliance officer.

“Diversity is excellent for the board because it brings improved point of view, it is far better for decision-producing and progressively important for the legitimacy of organizations,” explained Smith Ihenacho.

“It (a lack of feminine representation) could also be a crimson flag, that a firm does not have a great course of action to recruit the greatest director.”

Most other significant institutional buyers have a common request for boards to be various, and some are ever more organized to oppose boards they think about are not varied more than enough, but they commonly have not set precise targets for feminine illustration.

VOTING

In 2003 Norway turned the to start with state in the entire world to impose a gender quota, necessitating practically 500 corporations, including 175 companies stated on the Oslo bourse, to elevate the proportion of ladies on their boards to 40%.

Some other nations have adopted together related lines, these as Britain, which is aiming for 33% representation on FTSE 350 boards.

Starting off with the forthcoming AGM season, the Norwegian fund will use strain by voting towards appointments to the nomination committees of organizations that do not have at least two girls on the board.

“We will start out with produced marketplaces and at businesses wherever females are underrepresented, at significant and mid cap businesses in the U.S. and Europe,” claimed Smith Ihenacho.

She did not title names, but candidates for interest this 12 months may perhaps contain British carmaker Aston Martin and used car or truck on the internet auction company Copart in the United States, which have 1 female, respectively, on their boards.

The fund will refrain from voting from if corporations can have a “very excellent explanation, like a very clear strategy, with clear targets, or for the reason that of a the latest resignation that affected the gender stability on this board”, said Smith Ihenacho.

Last 12 months the fund voted from the nomination committees of 16 firms, all large and mid cap companies in the United States and Europe, since they had all-male boards, she explained. 1 of them was London-stated Domino’s Pizza, fund knowledge confirmed. The company has considering that then appointed two women to its board.

Dialogue with firms and voting at AGMs is the concentration of the plan, she extra, fairly than divesting from providers that do not comply with the plan.

Continue to, the fund can, and does, divest from corporations that do not comply with its positions on ESG problems it prioritises: last year, it divested from seven firms around tax transparency.

The fund only has a precise target on gender diversity now and not on other areas these as age or ethnicity, for case in point, because the latter can range in relevance from sector to sector or from region to region, explained Smith Ihenacho.

“But what is appropriate for all international locations is that gals in normal are underrepresented and that is why we have a focus on (on gender),” mentioned Smith Ihenacho.

Globally, 17% of corporation boards do not have a single female, she claimed.

“We definitely assume diversity generates greater considering and much better creativeness and much better organization, truly,” mentioned Tangen.

“The extra various the team of people who sit with each other, the extra creative solutions you get and so the superior enterprise. You get better innovations, greater alternatives. It is just good.”

(More reporting by Simon Jessop in London Editing by Susan Fenton)