Axa Investment Management will adopt one of the fund industry’s toughest policies on gender diversity next year, as part of a push by the €804bn asset manager to force businesses around the world to appoint more women to board roles.
The Paris-headquartered fund house said that from 2021 it will punish companies in developed markets that fail to appoint sufficient female directors, using its vote at annual meetings where women do not account for at least a third of board members.
It has also pledged to use its vote — either by voting against the head of the nomination committee or against the signing off of company accounts — in emerging markets and Japan where women do not hold at least one seat or make up 10 per cent of larger boards.
Matt Christensen, global head of responsible investment at Axa IM, said research had shown that companies perform better with more diverse boards, but many businesses had been too slow to move.
“We want companies to reach with us,” he said, adding that the target was aspirational but do-able.
The fund industry has become increasingly outspoken about the need for diversity on boards. Only a handful of asset managers, however, have policies in place to require at least a third of board members to be women. This includes Federated Hermes and France’s La Banque Postale AM and Lyxor, according to data from SquareWell, a shareholder advisory company. France has had a 40 per cent female board quota since 2016.
Deborah Gilshan, an independent adviser on investment stewardship and environmental, social and governance issues, said the coronavirus pandemic had reinforced the need for diverse boards.
“Boards that have not embraced robust governance, including diversity, have an added layer of risk,” she said. “With tough decisions to make, boards and CEOs need diverse teams who are able to challenge each other to get to the best outcome.”
Axa IM has already used its votes at companies in the UK FTSE All-Share index where less than a quarter of the board was female.
It voted against 45 companies over gender diversity issues in 2018, rising to 245 last year. Between January and May this year, it said it voted against 230 resolutions at 186 meetings based on a lack of female board members.
Yo Takatsuki, head of ESG research and active ownership at Axa IM, said the interests of shareholders were best served when there was “appropriate diversity of skills, knowledge and experience amongst the directors on the board”.
Ann Cairns, global chair of the 30% Club, which has lobbied for more women on boards, said 33 per cent was a “good target” for developed markets.
She added that in the UK, there are 127 boards in the FTSE 350 that have yet to reach the minimum threshold of 30 per cent female directors.