International Women’s Day: ESG Briefing: The round-up of IWD investment developments

Sunday March 8 was International Women’s Day: here is a round-up of some of the investment-related developments.

Gender diversity in the global fund industry hasn’t improved in the last 20 years, according to findings from Morningstar’s quantitative research group. The results found that at the end of 2019, 14% of fund managers were women – the same percentage seen in 2000. Some of the largest financial centers remain below the global average, including the UK (13%) and the US (11%). In 2000, women made up 19.4% of passive fund managers of US-domiciled funds, compared with 13.4% of active fund managers; those figures had dropped by 2019, with women making up 13.2% of passive fund managers in the US and 10.7% of active fund managers.

One-fifth of central banks have no women in senior positions – unchanged since last year – with more than half of these found in the Middle East and Asia Pacific, according to this year’s OMFIF Gender Balance Index. It is just one finding from the study, now in its seventh year, showing sluggish progress on gender diversity in the management and boards of central banks, sovereign funds and European public pension funds. A new survey added to the study this year asked what measures central banks have in place to help promote inclusion, and found that 54% have implemented a gender diversity programme and 15% reserve seats for women on their board of directors or monetary policy board. Only 14 central banks globally are headed by a woman, including the European Central Bank led by Christine Lagarde, its first female president.

Former UK pensions minister Ros Altmann has called for the country’s upcoming budget to address the “enormous gap between men and women’s pensions”, slamming policymakers for failing to adequately address the divide. Women on average receive £7,000 (€8,014) a year less pension than men, studies have shown, and the mean average pension wealth for women aged 65-69 was £35,700, just one fifth as much as men. Altmann said this was partly caused by women “falling through the cracks” in the new State Pension system, which she said “discriminates against women” by failing to adequately credit women who work multiple low earning jobs as well as women that take time out to care for children.

Increased gender diversity improves companies’ profitability and risk profile, and does so most when seen at the management level, according to new research from RobecoSAM, the Dutch asset manager’s sustainability outfit. According to the paper, the findings suggest that “a critical mass of women at each level would have a positive effect on organizational dynamics”. While the research found an increase in gender diversity on corporate boards, the increase at management level was “minimal”, rising from 24% in 2013 to 26% in 2018.

It could be 2044 before there are equal numbers of men and women on boards of publicly traded companies, MSCI has found, looking at when board gender parity would be reached under the rates of change seen in recent years. MSCI’s Women on Boards paper found that the percentage of women on boards of constituents of the MSCI ACWI Index has increased by an average of 1.2% year-over-year from 2016 to 2019 and the business-as-usual projection assumes that pace continues in the decades ahead. To reach parity by 2040 would require a year-on-year increase of 1.4% per year, while to reach parity by 2030 would require an increase of 2.8% per year.

At the end of March, the World Benchmarking Alliance (WBA) will launch the final methodology for its Gender Benchmark, which measures the extent to which companies contribute to the Sustainable Development Goal on gender equality (SDG 5). Part of the group’s wider work to measure and rank 2,000 companies on their contribution to the SDGs, the Gender Benchmark will start with a spotlight on the apparel industry’s 36 most influential firms. The WBA said the benchmark looks across companies’ entire value chains, and beyond corporate policies to assess their performance outcomes. The first iteration of the Gender Benchmark will be available in September 2020.