Diversity ‘activism’ targets big firms
Simplicity managing director Sam Stubbs says it is ‘‘crazy’’ his daughter has a 4 per cent chance of ever becoming a chief executive in New Zealand.
So, he is using his not-for-profit KiwiSaver provider to do something about it, and ultimately make people richer in their retirement, too.
Stubbs wrote to the chief executives of the country’s top 50 listed companies over the weekend putting them on notice of its ‘‘diversity activism’’ initiative.
Each company has been given six months to come up with a diversity plan, and five years to implement it.
Stubbs said the companies, all of which Simplicity owned shares in, could define what this looked like for themselves.
‘‘It’s not up to us to tell the companies what diversity should mean to them, but it will be obvious when you see photos of the board and management when it’s been achieved. Progress, or lack thereof, will be obvious within a year.’’
Stubbs said Simplicity had a range of options as a shareholder to take action against the companies which lagged. These could include voting against director nominations and rallying other shareholders against the board, but he said he would be surprised if it got to this.
Simplicity would also publish an annual diversity scorecard and new director Shamubeel Eaqub would spearhead the initiative.
Stubbs had met most of the chief executives, and spoken to all of them about the initiative, and said the most important thing was to highlight the issue. ‘‘This won’t come as a surprise to them.’’
One of Simplicity’s core motivations was improving longterm KiwiSaver returns.
The ‘‘compelling’’ research, which included a study of about 22,000 companies from 91 countries, was that women in corporate leadership improved financial performance.
Only France, Finland, Iceland, Norway and Spain had mandated female representation on corporate boards, which meant New Zealand could carve out a competitive advantage by following suit over the next five years.
Just 4 per cent of chief executives and chairpersons on NZX 50 companies were women, and only 13 per cent of directors, while even fewer were Maori, Polynesian or Asian.
In the public sector, 43 per cent of directors were women.
This gave Stubbs confidence companies could comply, and said he expected most would respond positively, even if there was some initial resistance.
Simplicity itself had a majority of female directors and trustees, people from a range of ethnicities, and 40 per cent of its senior management were women.
American investment managers Vanguard and Blackrock were increasingly interested in how companies were run as their ownership stakes grew, but Stubbs believed this was the first instance of a shareholder taking such a stance here.
Simplicity managed about $175 million for 6500 clients, so was still a small player, but Stubbs believed chief executives were excited by a shareholder coming to them with such a proposal.
‘‘Our members will be invested for up to 40 years, so we have a very long-term view.
‘‘If you want to be richer in retirement, this is the way to do it.’’