2014 could be the year a director of a public company fails to be elected due to proxy advisors’ concerns about board diversity.
Pru Bennett
As part of its analysis of gender diversity and policies in Australia’s largest listed companies, BlackRock has also reviewed the guidelines of the organisations that advise large institutions including superannuation funds on how they should respond to proposed board resolutions.
BlackRock’s research has found three of the most widely-used proxy advisors in Australia – CGI Glass Lewis, ISS Governance and Ownership Matters – have now disclosed that diversity is an issue and would consider changing their recommendations to achieve diversity.
In all, 18% of ASX200 companies have no gender diversity on their boards – 38% of companies without any gender diversity on their boards are from the resources industry.
Pru Bennett, BlackRock’s Corporate Governance and Responsible Investment Director – Head of Asia Pacific, said: “Proxy advisors give recommendations to a broad array of institutions, including those representing superannuation funds.
“These proxy advisors are now strengthening their stand on achieving diversity. For example, CGI Glass Lewis has said it will consider recommending voting against the chair of the nomination committee, or the equivalent, at the company’s AGM if a company’s record on diversity is poor.
“The Australian Council of Superannuation Investors (ACSI) also refers to diversity in the discussion of core principles of board composition in their guidelines.
“Our conclusion is that gender diversity can have clear positive ramifications for return on investment over the medium- to long-term. However, some investment is required, backed by clearly detailed and implemented policies, to kick start gender diversity’s virtuous circle.
“Unfortunately, our research says policies and reporting surrounding gender diversity among ASX 200 companies remain piecemeal.
“The majority of companies are also still applying a largely minimal standard mindset to the reporting of their diversity obligations.
“In the three years since our first report on diversity in Australia’s 200 largest listed companies, there has been some improvement but there is scope for more.”
