Despite a high-profile government campaign and evidence showing mixed boards perform better, more than three-quarters of fund managers do not care whether the companies they invest in have any women directors, a survey has found.
Hermes Investment Management, a £30bn fund manager, asked 109 UK and European institutional investors if they thought having women in the boardroom was important. The survey, Responsible Capitalism and Diversity, found 23% believed female board membership was important and only 19% thought it would be a good idea to impose a quota.
FTSE 100 companies are close to achieving a government target to have at least 25% of board seats held by women by next year. The target, set out by Mervyn Davies, the former trade minister, has increased awareness of the apparent benefits of having women on boards and has been backed by campaigners in the City.
Studies have found that female directors provide a different perspective on subjects ranging from what customers want to the merits of risky corporate ventures. A report by McKinsey & Company this year found that boards with women and ethnic minorities produced better investment returns than those populated entirely by white men.
Harriet Steel, head of business development at Hermes, said the report was disappointing and exposed entrenched underlying attitudes despite Christine Lagarde making it to the top of the International Monetary Fund and Janet Yellen leading the US Federal Reserve.
Steel said: “On the surface, the corporate world is making great strides in improving its record on diversity. There are greater numbers of women and ethnic minorities in increasingly senior positions. There have been a number of high-profile campaigns to improve diversity on boards. However, while these campaigns have achieved some progress, it is clear UK plc is still poorly diversified at senior management level.”
Most of the increase in female directors has been among non-executives, who monitor management rather than run the company. Last month, a report found that companies perform better when they have at least one female executive on the board. Carolyn McCall, chief executive of easyJet, and Liv Garfield, chief executive of Severn Trent water, are among a handful of women leading FTSE 100 companies.
Accountancy firm Grant Thornton, which produced last month’s report, called on shareholders to pressurise boards to put women in top managerial jobs, but the Hermes survey suggests most fund managers will not bother.
The latest survey found that, although fund managers were indifferent about female representation, 53% thought diversity of experience was important for a director and 69% valued board independence.
Steel said: “The main goal of board independence and diversity of experience is not simply to tick a corporate governance box. It is to avoid the pernicious and value-destroying practice of ‘group think’. The perils of this type of culture have been seen in corporate scandal after corporate scandal. It may be convenient for the members of a board to think in the same way, but it is rarely good for business.”
This article was written by Sean Farrell, for theguardian.com on Monday 12th October 2015 11.39 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010