Gender diversity is good governance

When I look at Time Person of the Year over the past 27 years, I find it striking that there are only 2 times that an individual woman has won the honour; Angela Merkel in 2015 and Greta Thunberg in 2019. Individual men won the honour 18 times. While it’s not a question of whether those individual men deserved it, it is glaring to me that despite the fact that women make up almost half of the world population, they are only visible or recognised 10% of the time.

ALMOST A CENTURY AND A HALF TO PARITY

According to the World Economic Forum, South Africa ranks 18 out of 156 countries in the 2021 Global Gender Gap Index. Even though there’s some way to go, in relative terms this is great news indeed, especially for a country grappling with historical inequality on multiple facets. Extrapolating current trends and the speed of progress, gender equity will be achieved in 135 years, a 35-year increase from 2020, almost exclusively because of the impact of Covid-19, which has amplified pre-existing gender gaps. 

DIVERSITY AND ESG

Environmental, Social and Governance (ESG) investing continues to gain momentum and it is no longer a ‘nice to have’, but a necessity. At Old Mutual, investing in companies with better ESG scores who are actively sustaining the environment, improving social conditions, and promoting good governance, is in our DNA. Diversity, as reflected in Board representation, is one of the key tenets of good governance and recently the inclusion of gender diversity in investment criteria has picked up speed. Big asset management firms such as Morgan Stanley, State Street, BlackRock among others have publicly stated that they would only invest in companies conditional to various targets of gender representation. 

WHY GENDER DIVERSITY IS IMPORTANT?

Empirical studies show that companies with more women on the board are more financially successful than those with less. The 2020 McKinsey and Company Diversity Wins Report found that companies on the top quartile in board gender diversity are 28% more likely to outperform their less diverse peers. The report further states that “female CEOs saw more value appreciation and improved stock price momentum for their firms; whereas female CFOs drove more value appreciation, better-defended profitability moats, and delivered excess risk-adjusted returns for their firms.”

At Old Mutual, we believe that it is in the interests of all participants in the financial ecosystem to play a proactive role in creating long-term sustainable outcomes for all stakeholders. Gender diversity is a key indicator of a company’s commitment to economic participation for everyone. It makes a company more representative and gives it a social licence to operate. Investors have the ability to be activists for change by choosing to invest in ESG funds, which hold companies that promote gender diversity through good governance. 

As custodians of our client’s investments and a responsible investor, we offer a range of ESG solutions for retail investors.  Visit oldmutualinvest.com to read more about our Responsible Investment Unit Trusts and our commitment to investing in a more equitable and sustainable world for future generations.

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