State Street Global Advisors placed Fearless Girl in the heart of New York’s Financial District on the eve of International Women’s Day 2017 to raise awareness about the importance of gender diversity in corporate leadership. Daring and confident, Fearless Girl celebrates the spirit of women who are taking charge today, and serves as inspiration for the next generation of female leaders. She was an instant sensation, drawing enormous crowds in New York, generating over 10 billion social, print and digital media impressions1, and galvanizing people across six continents.
In her first 20 months standing in New York’s Bowling Green, Fearless Girl inspired not only the next generation of women leaders, but also more than 300 companies globally to add a female director to their previously all-male boards. In December 2018, we partnered with the City of New York to move Fearless Girl to a new home – on an even bigger stage – in front of the New York Stock Exchange. From this new location, she will be able to have an even greater impact, serving as a constant reminder to companies and investors that having women in leadership is good for business. Fearless Girl is truly reinventing investing because she is changing the way we think about corporate performance.
Driving Sustainable Value
On the same day we placed Fearless Girl, we called on thousands of companies in our investment portfolio in the US, UK and Australia to increase the number of women on their corporate boards. We issued guidance to help them take action and became the first large US asset manager to announce that we would not hesitate to use our proxy voting power if companies failed to take action.
As one of the largest index managers in the world, we represent near-permanent capital and actively engage with portfolio companies on a range of issues to promote the long-term value of our client’s investments. We use a systematic, risk-based approach to overseeing environmental, social and governance (ESG) issues and each year prioritize engagement efforts around themes and sectors we believe to be especially relevant. We share insights with our portfolio companies into both the best practices and cautionary tales we derive from our engagement on ESG issues around the world and across multiple sectors.
Our overarching focus is on ensuring effective, independent board leadership. We believe that a strong board with relevant skills, and diversity of backgrounds and viewpoints, and which is not held captive by management is best positioned to focus on articulating a long-term strategy and holding management accountable for delivering on that strategy.
Research shows that companies with strong female leadership perform better than those without.2
A January 2017 Conference Board report indicates that companies with stronger female leadership not only perform better but also experience less fraud, bribery, corruption and shareholder conflict, and attributes the outperformance largely to the independent perspectives women bring to the boardroom.3 Yet in 2017, 1 in 4 Russell 3000 companies did not have a woman on their board.4
The research tying the presence of women on boards to performance drives our conviction that increasing gender diversity in company leadership will benefit our clients and the economy over the long term.
Using our Voice and Our Vote
Now in its second year, the Fearless Girl campaign has expanded to also include pushing for board diversity in Japan and Canada, and the effort continues to drive impact globally.
Since March 2017, we’ve called on over 1,200 companies with no women on their boards to take action. In the first half of 2018 alone, we voted against nearly 600 companies that have not taken adequate steps toward adding at least one female director. But we are pleased that 301 companies have now added a woman to their board and 28 more have committed to doing so.
To build upon this momentum, in September 2018 we announced an escalation of our board diversity voting guideline. The initial voting guideline dictated that State Street Global Advisors would vote against the nominating and governance committee chair if the company failed to commit to action in the near term. Going forward, the guideline will be enhanced to also vote against the entire slate of committee nominees if a company does not take action within a specific timeframe of three years. This will be implemented on a rolling basis such that it is effective for companies in the US, UK and Australia in 2020, and for companies in Japan and Canada in 2021 – three years after State Street Global Advisors began targeting companies in each country.
But we feel our efforts can’t stop at the board level if we truly want companies to adopt policies and practices that will help strengthen gender diversity throughout their organizations. To that end, this year we are also calling on our portfolio companies to monitor and disclose the level of gender diversity not only on their boards but at all levels of management. We will begin screening and engaging with companies in the STOXX 600 and FTSE 350 indexes to start, seeking to understand company practices that promote diversity.
1 Spreadfast Intelligence, as of September 21, 2017
2 “Women on Boards: Global Trends in Gender Diversity on Corporate Boards,” MSCI, November 2015
3 “The Effect of Gender Diversity on Board Decision-making: Interviews with Board Members and Stakeholders,” The Conference Board, January 2017
4 State Street Global Advisors Asset Stewardship Team, March 2017