Norwegian wealth fund pushes for more women
• SA among emerging markets affected by broadening of policy
Norway’s $1.6-trillion sovereign wealth fund, the world’s largest, would call on emerging-market companies in which it invests to appoint more women to their boards, top officials told Reuters, making the policy global for the first time.
One of the world’s largest investors, the fund holds stakes in about 8,800 companies globally, owning about 1.5% of all listed stocks. It has set the pace on a range of issues in the environmental, social and governance field.
Since 2021, the fund has pushed companies to boost the number of women on their boards and to consider targets if fewer than 30% of directors are female, focusing first on Europe and the US, and expanding the policy to Japan last year.
The policy would now be applied to companies in emerging markets, including India, SA, Brazil and Egypt, the fund said in its updated voting guidelines shared with Reuters ahead of their publication.
It means companies such as Qatari telecom firm Ooredoo, Indonesian industrial company ESSA and Brazilian logistics firm Hidrovias do Brasil, which now have no female directors, could be affected.
The fund’s push could be a challenge in countries where the pool of candidates is smaller than in the developed world, and comes amid some signs of a public backlash in the US against the drive to bring diversity to the top of organisations.
Since 2021, the fund had seen “great improvements” on gender diversity on boards, its chief governance and compliance officer, Carine Smith Ihenacho, said in an interview. She highlighted Europe, where state regulation and best practice guidelines had boosted female director numbers.
Yet, “we have been thinking for a long time that we also need to vote in countries where this is actually more of an issue”, she said.
“In some developed markets and emerging markets that is where we are really seeing women lagging behind.”
In practice, this means that if a company in an emerging market does not include at least one director of each gender, the fund will vote against the election of the chair of the nomination committee — or the chair of the board if there is no nomination committee — at an AGM. In developed markets, the fund will continue to vote no if the board does not include at least two directors of each gender.
The new voting guidance was expected to affect some 5% of companies in the fund’s equity portfolio, said Amy Wilson, the fund’s head of stewardship.
“Our voting policy is there to address laggards and bring up the lowest performers, to close the gap up with our expectations,” said Wilson.
Overall, about 60% of companies in the portfolio were still below the expectation of at least 30% representation of each gender on boards, Wilson said.
The fund had been “pleased” to see progress on gender diversity at Hollywood studio Warner Bros Discovery and European bourse Euronext, it said. Both had one female director each in 2022, leading the fund to vote against the companies. They now each have three female directors.
The fund also toughened its policy for South Korea, Singapore and Poland, which had been exempt from the gender requirement even though the investor had already classified the three nations as developed economies.
Those nations, along with Japan, will be required to have at least one member of each gender on the board, reflecting slower progress overall on gender diversity on boards, “less mature pipelines of senior women” , and “smaller pools of female directors”, Wilson said.
So far, the fund had not divested from a company because it did not respect its gender diversity requirement and nor was it planning to, Smith Ihenacho said. “I think on this issue it is much better to be a vocal investor,” she said.
The fund’s policy has had some unexpected outcomes. In one case, the fund had to vote, two years in a row, against the chair of the nomination committee of a company that did not have a single man on its board.
The firm? Lingerie company Victoria’s Secret.
THE FUND HAS NOT DIVESTED FROM A COMPANY BECAUSE IT DID NOT RESPECT ITS GENDER DIVERSITY REQUIREMENT