Asset manager to take action against 6 STI firms with no female directors

STATE Street Global Advisors (SSGA), the world's third-largest asset manager with nearly US$3.12 trillion under its care, has identified six companies on the blue-chip Straits Times Index (STI) that do not have female board representation, and is seeking to effect change with its voting power starting this year.

At a media call on Friday, Benjamin Colton, global co-head of asset stewardship at SSGA, said the group has expanded its gender diversity voting guidelines to Singapore as well as Hong Kong, where 11 companies on the Hang Seng Index have been identified with no females on board.

The voting guideline was introduced in the US, UK and Australia in 2017, and extended to continental Europe, Canada and Japan in 2018.

Speaking from the US, Mr Colton said: "Starting this year, we will be voting against the chair of the nominating committee, or in those companies which don't have a formal nominating committee, the person that is most responsible for the nomination process.

"We have internal guidelines on who those people are, but we will be looking at that one director for companies identified and don't add a woman on their board, or don't have successful engagement with us to commit to adding a woman to the board.

"After three years, if they still haven't added a woman to their board, we will be voting against the full nomination committee, or the equivalent for companies which don't have a nominating committee."

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Mr Colton said SSGA will not be nominating its own directors.

While he did not identify the six companies on the STI, a rough check showed UOL Group, Jardine Matheson Holdings, Jardine Strategic Holdings, Dairy Farm and Yangzijiang Shipbuilding are among those companies that do not have any female directors.

SSGA will be sending the firms letters to engage them in dialogue, sharing guidance on how to increase gender diversity on board and at executive management levels and build a pipeline of talent.

"From a business perspective and a fiduciary duty perspective of us as an asset manager, we thought it is essential to take action with the companies we invest in to increase the level of gender diversity on their boards," Mr Colton explained.

Many studies show that when there is diversity, companies perform better in the long term, generate higher return on equity, have the ability to see different perspectives, and are more nimble and innovative.

"We are long-term owners and understand that this is a long-term issue. We are doing this not to punish companies but to help them. That's why we are issuing guidelines and engaging with companies," Mr Colton said.

Singapore and Hong Kong are included because both are developed markets SSGA is investing in, offer healthy engagement with companies, as well as have explicit guidance on gender diversity.

"The gender diversity picture is quite advanced, with many companies having females on boards. So those companies without are real laggards and outliers," he added.

As at February 2020, 681 companies out of the 1,384 identified by SSGA responded by adding a female director. In the US, 495 boards of directors added a female member, while 33 and 13 made the change in Canada and the UK, respectively. In Japan, 101 boards added a female director and 30 added a female director in Australia.