Brenda Trenowden

A growing body of empirical evidence and research, from different sources and geographies, corroborates the intuitive argument that more diverse boards and senior management teams are more effective than ‘identikit’ teams in delivering better decision-making, and that firms with better gender balance at board and management levels outperform their peers on a variety of financial measures^[1] , says Brenda Trenowden, Global Chair, 30% Club and Head of FIG Europe, Australia and New Zealand Banking Group Limited (ANZ) and Deborah Gilshan, Co-Chair, Investor Group, 30% Club and Governance & Stewardship Director, Aberdeen Standard Investments.

Both Ms Trenowden and Ms Gilshan highlight the following points: A better gender balance is good for the economy and should be supported by public policy. However, this should not be through ‘hard’ legislation such as quotas, as we do not believe that their impact filters down into companies and into organisational cultures to deliver long term sustainable change.

The stakeholders who are in a position to really drive change are Chairs and CEOs, regulators and public policymakers and investors – both asset owners and asset managers.

Shareholders have a major role to play in expecting their investee companies to seek out and hire the best people and to draw on all of their individual strengths and experiences to produce the best possible outcomes.

The 30% Club believes that board appointments should always be made on merit and that considerations on diversity can ensure that appointments are made precisely on that basis, by widening the pool of talent available from which board appointments are made.

There are many consequences of a lack of diversity for board effectiveness, including a lack of appropriate representation and understanding of a company’s customers, workforce and geographic footprint, all key to successful delivery of long-term strategy. Importantly, increased diversity on the board is likely to reduce the potential for entrenchment and groupthink, and will further widen the potential talent pool for appointments.

Diversity is not a social issue, it is a financial issue and should be treated like any other business imperative, with targets that are regularly measured and reported. What gets measured gets managed, and what gets managed gets done.

The Investor Groups at 30% Club are growing in AUM globally and we intend to harness the power of stewardship to work together to hold investee companies to account on this important issue.

We believe boards that genuinely embrace cognitive diversity, as manifested through appropriate gender representation and a broad spectrum of skills and experience, are more likely to achieve better outcomes for their investors. Intuitively, it makes sense that diverse groups will be able to draw on a wider set of experience and broader thinking, leading to better decisions and, ultimately, superior financial performance over the longer term.

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[1] McKinsey Women Matter: Ten Years of Insights on Gender Diversity, October 2017
Petersen Institute: Is Gender Diversity Profitable? Evidence from a Global Survey, February 2016
MSCI Women On Boards: Global Trends in Gender Diversity on Corporate Boards, November 2015
Grant Thornton The Value of Diversity, September 2015
Credit Suisse The CS Gender 3000: Women in Senior Management, September 2014
Credit Suisse Gender Diversity and Corporate Performance, August 2012
Citigroup ASX100 Women on Board Analysis, August 2011
Catalyst ‘The Bottom Line: Corporate Performance and Women’s Representation on Boards’, 2007

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