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Exclusive: Norway wealth fund tells firms: put more women on your boards

Stock Markets Feb 15, 2021 05:50PM ET
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© Reuters. FILE PHOTO: Norwegian flags flutter at Karl Johans street in Oslo, Norway

By Gwladys Fouche

OSLO (Reuters) - Norway's $1.3 trillion sovereign wealth fund, the world's largest, wants the companies it invests in globally to boost the number of women on their boards and to consider setting targets if fewer than 30% of their directors are female, top fund officials told Reuters.

One of the world's largest investors, the fund holds stakes in around 9,200 companies worldwide, owning 1.5% of all listed stocks. It has set the pace on a host of issues in the environmental, social and corporate governance (ESG) field.

Boards where either gender has less than 30% representation should consider setting targets for gender diversity and report on progress, the fund said in a position paper shared with Reuters ahead of its publication later on Monday.

"We may phrase it politely, but it is pretty clear what we think," Chief Executive Nicolai Tangen said in an interview.

"What we want to see is better representation of women on the boards," added Carine Smith Ihenacho, the fund's chief governance and compliance officer.

"Diversity is good for the board because it brings better perspective, it is better for decision-making and increasingly important for the legitimacy of companies," said Smith Ihenacho.

"It (a lack of female representation) could also be a red flag, that a company does not have a good process to recruit the best director."

Most other big institutional investors have a general request for boards to be diverse, and some are increasingly prepared to oppose boards they consider are not diverse enough, but they typically have not set precise targets for female representation.

VOTING

In 2003 Norway became the first country in the world to impose a gender quota, requiring nearly 500 firms, including 175 firms listed on the Oslo bourse, to raise the proportion of women on their boards to 40%.

Some other countries have followed along similar lines, such as Britain, which is aiming for 33% representation on FTSE 350 boards.

Starting with the upcoming AGM season, the Norwegian fund will apply pressure by voting against appointments to the nomination committees of companies that do not have at least two women on the board.

"We will start with developed markets and at companies where women are underrepresented, at large and mid cap companies in the U.S. and Europe," said Smith Ihenacho.

She did not name names, but candidates for attention this year may include British carmaker Aston Martin and used car online auction firm Copart (NASDAQ:CPRT) in the United States, which have one woman, respectively, on their boards.

The fund will refrain from voting against if companies can have a "very good explanation, like a clear plan, with clear targets, or because of a recent resignation that affected the gender balance on this board", said Smith Ihenacho.

Last year the fund voted against the nomination committees of 16 companies, all large and mid cap companies in the United States and Europe, because they had all-male boards, she said. One of them was London-listed Domino's Pizza (NYSE:DPZ), fund data showed. The firm has since then appointed two women to its board.

Dialogue with companies and voting at AGMs is the focus of the policy, she added, rather than divesting from companies that do not comply with the policy.

Still, the fund can, and does, divest from companies that do not comply with its positions on ESG issues it prioritises: last year, it divested from seven companies over tax transparency.

The fund only has a specific target on gender diversity currently and not on other aspects such as age or ethnicity, for example, because the latter can vary in relevance from sector to sector or from country to country, said Smith Ihenacho.

"But what is relevant for all countries is that women in general are underrepresented and that is why we have a target (on gender)," said Smith Ihenacho.

Globally, 17% of company boards do not have a single woman, she said.

"We really think diversity creates better thinking and better creativity and better business, really," said Tangen.

"The more diverse the group of people who sit together, the more creative solutions you get and so the better business. You get better innovations, better solutions. It is just good."

Exclusive: Norway wealth fund tells firms: put more women on your boards
 

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Comments (17)
Chris Sundo
Chris Sundo Feb 15, 2021 6:29PM ET
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The incoming WTO chief 'Dr. Ngozi' is a good example of why education for women matters so much and why in my opinion the USA should not leave Afghanistan to a predictable outcome of repression under the former Al-Quaeda and ISIS. It's said of Dr. Ngozi that 'She studied development economics at Harvard after experiencing civil war in Nigeria as a teenager. She returned to the country in 2003 to serve as finance minister and backers point to her hard-nose negotiating skills that helped seal a deal to cancel billions of dollars of Nigerian debt with the Paris Club of creditor nations in 2005.' In other words, educated women tend to be more responsible about making a valuable contribution to a better world rather than falling prey to the 'me me me' angle
Chris Sundo
Chris Sundo Feb 15, 2021 6:05PM ET
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Very few educated women would truthfully vote GOP or Trump because educated ppl can see through self-serving ppl who're out to enrich themselves. In other words, on average women have a better hunch about reality and hunch that supports a healthy society. -- Health will cause growth. -- Women are less driven to enrich themselves at the cost of society, unlike men as is being demonstrated by Trump and his stooges and the non-convictor GOP
Chris Sundo
Chris Sundo Feb 15, 2021 6:05PM ET
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Educated women make it to the top unlike uneducated women. The GOP has suppressed education to increase the chance that the difference might end up funnelled into their pockets. GOP has been interested in a dull population to pull the wool over their eyes more easily as was proven by the Trump fiasco. Uneducated Americans like will have to learn the hard way, and too slow for staying aloft. Thus USA is sinking while educated populations end up ahead .. a very logical outcome, just like doctors pull ahead in socio economic standing
Steve Lora
Steve Lora Feb 15, 2021 5:59PM ET
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I personally would like to see a bi trans jamaican as CEO of Reuters
Steve Lora
Steve Lora Feb 15, 2021 5:57PM ET
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Id rather have an old white man, 90 yrs old; If my funds are hiring affirmative action then im cashing out. My first fund mgr was with Moneta Funds and never did jack..
Red Riley
Red Riley Feb 15, 2021 1:41PM ET
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or maybe best qualified seems to work.
Kaveh Sun
Kaveh Sun Feb 15, 2021 10:43AM ET
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Boards r mostly uses, yes men anyway. I dont have a problem w that.
Fernando Lazarini
Fernando Lazarini Feb 15, 2021 10:11AM ET
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I´d like to know if they think about imposing this agenda on Chinese companies ;)
Lake Lot
Lake Lot Feb 15, 2021 9:19AM ET
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What about shehe
Lake Lot
Lake Lot Feb 15, 2021 9:19AM ET
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There go the boards
Ravi Chandra
Ravi Chandra Feb 15, 2021 9:15AM ET
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So they are saying a quota based on gender over which none of us have any control is morally acceptable?
 
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