The Australian Council of Superannuation Investors (ACSI) says it will consider recommending against the re-election of directors in major listed companies which perform poorly on board gender diversity.
ACSI makes recommendations to 30 member-funds, who collectively manage over A$450bn (€288bn) on behalf of 8m people; the decision is outlined in its new Governance Guidelines.
Last year, the council – which provides research and advice to assist its member superannuation funds to manage environmental, social and corporate governance (ESG) investment risk – announced a policy target of 30% women on each ASX 200 board by the end of 2017.
That target recognises that a properly structured board needs skilled directors who add diversity of thought to board decision making, which it says is more likely to occur when directors have sufficiently diverse backgrounds.A decision to recommend against re-election would come where attempts by ACSI to engage at a senior level are ignored, or when the board is unable to articulate a strategy to address the issue in the near term, the body says. It adds that this is “not unreasonable”, as companies have two years notice to achieve the target.
“We’re pleased to see that since our policy launch and direct communication with more than half of the chairs of the ASX 200 this year, an additional seven companies have added sufficient women directors to meet our 30% target,” ACSI CEO Louise Davidson said.
There are now 40 companies who meet the target, and 25 more on the cusp of hitting it and the speed of change appears to be “accelerating” ACSI reckons, which it says debunks the argument that sufficiently qualified candidates are in short supply.
ACSI’s best practice Governance Guidelines are updated every two years to take into account the evolving regulatory and governance landscape; they are developed in consultation with its members.