Where are the Women?

In honor of International Woman’s Day, State Street Global Advisors Head of ESG Investments and Asset Stewardship Rakhi Kumar addressed the Organization for Economic Co-operation and Development in Paris, and called on companies to disclose gender data across their entire businesses to build more diverse leadership pipelines for the future. Her remarks at the event can be read below:

Rakhi Kumar
Head of ESG Investments and Asset Stewardship

Good afternoon and Happy International Woman’s Day to everyone!

I would like to thank the OECD for the kind invitation to speak to you today.  It is indeed an honor to be here.

Today marks the one-year anniversary of State Street’s Fearless Girl campaign that began with us placing a statue of a girl near Wall Street where no one could ignore her.

We did this in order to bring attention to the lack of women on corporate boards.

And we backed it up with a call to action for companies in the US, UK and Australia to add at least one woman to their board, failing which, we would take voting action against directors on the board.

In the days following the launch of the campaign some folks criticized us for placing the statue of a girl instead of a woman on Wall Street.

Our response was clear – have you looked at the numbers?

We are not going to get there today or in the immediate future.  We need to start focusing on building and strengthening the pipeline of women if we wish to achieve gender parity in boardrooms and the work place.

So that when that girl down on Wall Street grows up, she will work in a more equal world.

During the course of the year, whenever I shared our expectations and voting guidelines on gender diversity, I was often asked – What evidence do you have that more women on boards helps create long-term value?

To which I would cite all the research by McKinsey, MSCI, the Conference Board, which show that companies with women on boards outperform companies that have no women on their boards.1

I would point to a study by the Conference Board that examined  boards here in France,2 which found adding women to the board affected the substantive outcomes of corporate decision-making – by raising new points for discussion, focusing more on risk management and reducing groupthink.

I would explain that our call to action was linked to our focus on improving board quality.  We believe that adding diversity of thought in the boardroom helps make boards stronger and more effective.

However, all the while, as a woman, I kept asking myself – “Why is it that I need to prove that having more woman on boards helps performance when I have never been asked to prove if all male board help create value?”

This is an example of the biases that exist in our society that need to be addressed if we want to truly achieve gender parity in the workplace.

Unfortunately, we are not willing to become more just and equal societies unless we have statistical evidence that it’s beneficial to do so.

And for those in the audience who wonder if all male boards help create value, I have checked and I have not found any research to prove it.

Today, I would like to address three diversity related topics with you:

I want to share with you the impact that the Fearless Girl has had in just a year

Discuss some of the challenges and identify where we will go from here

Address some of the broader gender related issues that have surfaced in the year

Part I: Impact In Year One

So let’s recap the year – And what a year it’s been!  A year in which, the Fearless Girl, much to our amazement became an overnight global sensation and a symbol for gender equality.

From a stewardship program perspective – she has been a great success.   

The day after the news ran, we got calls from companies asking us to clarify our expectations.

Many proactively began explaining why they did not have a woman on their boards and what they planned on doing about it.

We called on over 700 companies with no woman on their boards to add at least one woman on their board.

We followed that by engaging with dozens of companies on this issue. We are extremely encouraged by the fact that 34 companies have now committed to adding at least one woman on their board.

Some of the best conversations have been with companies that already have a woman on their board but tell us that they intend to add more female directors in the coming years.

But we did not hesitate to use our voting power in cases where companies did not commit to taking action. In line with our guidelines we voted against directors at over 500 companies …

And for the more positive number – I am happy to disclose that in just one year 152 companies that we have been monitoring since the launch of the campaign have responded to our call and have added a woman to their board.

The impact does not stop there- in the months following our call to action, asset managers and asset owners controlling over $13 trillion have joined us and are also prioritizing diversity as a stewardship priority.3

We welcome and thank them for joining our call to action.  Together our voices are louder and are being heard.

However, this journey has just started.  This year we expanded our call to action to include companies listed in Canada and Japan where female representation on corporate boards continues to be low. 38.5% of TSX and 55% of Topix 500 listed companies4 have zero women on their board.

I was in Japan in January and engaged with over 80 companies to clarify our voting guidance.  Given the diversity numbers in that market, it was not surprising that there were a lot of questions about the guidance.

Some of the questions raised by companies included:

What if our company only sells to men?  I was a bit dumbfounded – what kind of a company could that be?  What sector?  What businesses only cater to men?

Some of the other questions were…..How do you expect us to find so many women?  We don’t have qualified women in the market? Is this the right time in our market?

And, of course, the question on proof yet again – what evidence do you have that this will help create value?

Part II: Addressing The Pipeline

So let’s explore one of the challenges that we think is valid – that lack of gender diversity in senior management, which limits the pipeline of qualified women to serve on boards.

In our gender guidance last year – we did publish a pathway to increased diversity that focuses on:

Assessing levels of diversity at all levels of management

Establishing long-term diversity goals at the board and senior management level

Identifying a diversity champion that would promote and support diversity initiatives

Addressing social and behavioral biases in the director nomination and the senior management promotion process

Having more woman serve in leadership roles to serve as role models

Finally, disclosing diversity related information publicly

However, through engagement we have found that few companies disclose information on the diversity practices in their firms.

So what should we do about the lack of disclosure? Where do we go from here?

Take for example, one of the reasons we did not include European countries in the Fearless Girl campaign was the higher level of diversity on boards compared to other regions. That higher level is due to the expectation of gender quotas set by different countries in the EU.

But have quotas worked?  Has creating a requirement at the board level helped increase diversity – not just on boards but also in senior management?

Think about it – if serving on the board is the highest accomplishment of your career, then one would expect that the number of women serving in leadership or senior management roles would be higher than the number of women serving as directors on boards.

Unfortunately, the numbers tell us a different story.

Bloomberg reports that at companies in the STOXX 600 index (that focuses on large European companies) – the average percentage of woman on boards is 27.5% while the average percentage of senior women executives is just 14%.5

Things look a bit better in the US at S&P500 companies, at least on the senior executive level, where the average percentage of senior women executives is higher – at 18% compared to an average of 21% of woman on boards.5

The story in the UK is even worse – only 13.5% of senior woman executives to 22.5% of woman on boards in FTSE 350 companies.5

Finally, in Australia the numbers are no better with an average of 16% of women in senior roles companies to 22% of woman on boards of ASX 3005.

How do we explain this? What’s going on?

Well for starters – the publicly available data sets are not perfect.  The Bloomberg data is missing some companies in the various indices – that’s because companies are not systematically reporting on diversity levels in management.

To get quality data you need to find specialized data providers and there are few out there.

But here is another explanation, from a female director on a European company board.

She told us during our engagement that many women in the EU, once they reach a certain level of seniority, are leaving management to become professional directors on boards.

This is impacting the pipeline of women and also the quality of woman on boards – and it is an unintended consequence of the quota system, which has improved female representation on boards but at a cost to companies and investors.

We need to explore how we can keep women in senior roles while also allowing them to serve as directors.  In fact, many companies actually forbid their executives from serving on corporate boards – despite the obvious benefits to all involved.

Companies need to allow their senior managers—both men and women—to serve on boards as part of their professional development process.  That may help us from not losing as many women in senior management.

As investors we must demand that our portfolio companies begin monitoring and disclosing the level of gender diversity on not only boards but also at all levels of management.

Increased transparency will help focus management and boards on adopting policies and practices that will help strengthen gender diversity at all levels of management.

So today, we announce that on the second anniversary of the Fearless Girl, we expect companies in our portfolio to disclose gender diversity at all levels of management.

We will begin screening and engaging with companies in the STOXX 600 and FTSE 350 indexes on these issues in 2018.  During engagement we will seek to understand company practices that promote diversity.

As is our practice, we will share are insights from our engagements with our clients and other investors and will look to expand this review to other regions in the following years.

As a subsidiary of a publicly listed company, we recognize that gender equality is not achieved overnight.  It is a journey that often does require a sharp change in course to set the company up for future success in years to come.

At State Street, we have seen that for ourselves as we have started that journey.

In October last year, a routine government audit was conducted looking at data from 2010 and 2011 that examined our pay practices and it made some news.

We disagreed with the conclusions of the audit. And we were conscious that our actions might cause some to question our commitment to pay equity, and the policies and programs we have in place to promote gender diversity.

But we entered into a conciliation agreement because we did not want to be distracted from our focus on building a diverse workforce.

But it reminds us how far we all have to go.

In our own company, we have worked to increase the representation of women and employees of color in more senior – and higher paying – roles.

Today, 47 percent of our employees globally are women as well as nearly 25 percent of our management committee and 30 percent of our board.  We have made progress, but we are continually challenging ourselves to improve each year.

And on the issue of pay parity, we helped launch the Boston Women’s Workforce Council’s 100% Talent Compact which requires companies to participate in a wage data collection process in order to more accurately understand and address wage gaps.

Like most companies, we have more work to do on this issue.

But proactively enhancing disclosure and changing practices so that we can strengthen the pipeline is something that is as important to us as an employer as it is a global, long-term investor.

We must make a difference.

Part III: What We Have Learned

I want to close by telling a story that shows some of the progress we are making on these issues but also some of the challenges.

As you all know, unequal gender dynamics that exist in our companies today was one of many gender issues that came up during 2017.

At the start of the #MeToo movement, I was at a director conference where a group of female directors asked the broader audience why they, as directors, were so sure that inappropriate behavior was not happening at the firms that they were overseeing.

It was interesting to hear a few directors rebut the concern by pointing to zero tolerance policies as evidence that such behavior was not acceptable in THEIR companies. They believed these policies were evidence of it not happening.

However, we all know that policies are effective only if enforced. Board and company culture is significantly more important and we all know how hard it is to change corporate culture.

I came away from that conference happy knowing that directors had begun asking important questions on broader gender issues.

We don’t have all the answers and as investors and policymakers.

We are all still learning.

But one thing we are learning is that we can make a difference by raising questions.

By taking voting action and by correcting the course today so that the young fearless girl, standing in the middle of wall street will grow up tomorrow in a more equal society.

One in which gender biases do not limit opportunities and where gender does not dictate outcomes.

Thank you for your time.  


1 “Why Diversity Matters” McKinsey, Feb 2015; “The Effect of Gender Diversity on Board Decision-making: Interviews with Board Members and Stakeholders” The Conference Board, Jan 2017; “Women on Boards: Global Trends in Gender Diversity on Corporate Boards,” Lee, Linda Eling, et al., MSCI, November 2015. Accessed on February 17, 2016. MSCI defined strong female leadership as having a board of directors with at least three women, which research suggests comprises a critical mass for decision making influence, or a percentage of women that’s higher than average in the company’s country.

2 The Effect of Gender Diversity on Board Decision-making: Interviews with Board Members and Stakeholders” The Conference Board, Jan 2017.

3, Bloomberg, Pensions & Investments, CNBC May 2017.

4 Data provided by ISS as of Dec 31st 2017.

5 Bloomberg as of 31 December 2017.


The views expressed in this material are the views of Rakhi Kumar through the period ended 3/8/2018 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.

There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

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Expiration Date: 3/31/2020