According to a 2014 study by MSCI ESG Research , women hold only 17.3% of the directorships among MSCI World companies. A growing number of countries have set quota amounts for female representation, ranging from at least one female on the board in 2014 (India) to 40% in 2015 (Spain). Other countries to have set quota amounts are Belgium, France, Italy, the Netherlands and Norway. Hopefully, the percentage of women on company boards will increase, but for now, they remain largely under-represented.

Good business sense

Companies with higher levels of diversity in both workforce and boards can have competitive advantages. Multiple studies show that companies with several female board members tend to perform better in terms of revenue growth and profit. Anecdotal evidence also indicates increased innovation, dynamism, and openness, and better sustainability performance, particularly related to governance issues. These advantages can lead to an improved company reputation and ultimately to improved financial performance. Research also indicates that companies with strong female board representation are more likely to have a corporate culture that stimulates the inclusion and improvement of the position of women throughout the organisation leading to increased gender equality.

Triodos takes action

Triodos believes that it’s part of the social responsibility of a company to have a diversified Board including a good balance in male and female Board members. As part of our approach to proxy voting and our engagement strategy with investee companies, this year we contacted 120 companies on this subject. We requested that they publicly disclose their policy, programmes and targets on gender equality, as well as the percentage of women in their workforce, including their executive and supervisory boards. We asked them to also publish an evaluation of their policy and the actual developments and achievements with regard to gender equality, and to inform us about these topics in advance of their annual general meeting.

What did investee companies tell us?

Of the companies we contacted, 38 responded and 26 provided information. The results told us that women hold on average almost 22% of the directorships of the responding companies.

Only few, one of them Swisscom, addressed the issue of gender diversity with a comprehensive approach that includes policies, programmes and targets. Canadian Railway is also on the right track, with the company having adopted a board diversity policy in March 2015 and committing to achieve a minimum representation of one-third of the Board by women by 2017.

The responses we received suggest that the companies we invest in do better than the MSCI World. But the number of responses is too limited to draw a reliable conclusion about the percentage of women on the board of companies in our entire investment universe. Nevertheless, there is room for improvement and we will continue stimulating companies to improve this balance.

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.