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Mar 08, 2019

Fearless Girl campaign prompts more than 400 firms to add female director

State Street Global Advisors happy with progress, but preparing stricter repercussions for companies that persist with all-male boards

Earlier this week, the world’s second Fearless Girl statue was installed in London, just feet away from St Paul’s Cathedral. As is the case with her counterpart in New York – originally installed opposite the Financial District’s Charging Bull and now stationed outside the NYSE – she stands tall, hands on hips, looking proudly out to the world.

When New York’s Fearless Girl statue was installed, on International Women’s Day 2017, it marked the beginning of State Street Global Advisors’ (SSGA) campaign to engage its portfolio companies that lacked female representatives in the boardroom.

During the last two years, the asset manager – which has an estimated $2.8 tn in assets under management – has engaged with 1,265 companies on their lack of female board representation. More than one third (423) of those companies have subsequently added a female board director, while many others have committed to do so.

‘We think that’s fantastic progress,’ Lynn Blake, SSGA executive vice president and chief investment officer of its global equity beta solutions, tells IR Magazine. ‘We recognize that an effort like this takes time. It’s important to recognize the right board member, and a 100 percent success rate would be too much success in a short space of time. We also absolutely recognize that there’s more to do.’

Voting against nominating committees

When the campaign launched in 2017, SSGA targeted three countries: the US, the UK and Australia. Then last year it expanded its reach to cover public companies in Canada, Japan and continental Europe. The asset manager made it clear in a policy update mailed to portfolio companies that it would vote against the re-election of the chair of the nominating committee if the company did not add a female board director or commit to doing so.

Now SSGA is upping the ante. At the start of this year it sent out letters to its portfolio companies that this proxy season it will vote against the re-election of all members of the nominating committee if female board directors aren’t being added or seriously considered. 

Blake encourages companies that operate with an all-male board to engage with SSGA to explain why. ‘It’s important to have that discussion and understand what their [portfolio companies’] concerns are and explain why it’s important to us as a shareholder, to our portfolios and to our investors,’ she says.

‘It’s all centered around the business case. There’s strong evidence that shows a board that has greater diversity and more women in board positions leads to better financial outcomes. The majority of conversations we’ve had indicate that there’s a willingness.’

In the rare conversations where there isn’t agreement with the campaign, Blake says the dissent falls into two groups: one group that suggests there isn’t necessarily a causality between female board directors and better financial performance, and a second group that suggests there isn’t a strong enough pipeline of board-ready women.

To the first group, Blake responds by suggesting that boardrooms are much less likely to be susceptible to groupthink if they represent a diverse range of skills, backgrounds and perspectives. And in response to the suggestion there’s a dearth of female board directors, she says: ‘If your only criteria is that the candidate has to have been a CEO, that is absolutely limiting.’

What’s next for the Fearless Girl?

Blake says the Fearless Girl campaign will continue to evolve. While the primary focus is very much on board diversity, she confirms that SSGA is now having conversations with its portfolio companies about diversity in the executive ranks and below.

‘Of course, having diversity at the top of the house is crucial, but we also need diversity among the people who are running the day-to-day business,’ she explains.

The team is keen to caution against what Blake calls a brain drain, where women are fast-tracked away from the executive ranks and become members of several boards. In the UK, for instance, female non-executive board representation is now at 35.4 percent in the FTSE 100, but female executive directorships stand at only 9.7 percent, according to the latest audit from Cranfield School of Management.