Australia’s largest pension fund has begun voting against the re-election of directors at companies without any female representation on their boards, as part of a push by the A$2.2tn superannuation industry to promote gender diversity.
This month AustralianSuper, which manages A$110bn (US$82bn) in assets and has 2.2m members, voted against the re-election of Martin Rowley, chairman of Galaxy Resources, at the annual meeting of the Perth-based Lithium miner. In April the fund voted its shares against re-election of Marcelino Fernandez Verdes as chairman of the A$13bn construction company, Cimic Group.
Both men were re-elected to their posts in spite of the protest vote by AustralianSuper but the fund has vowed to continue advocating for change. Last year the fund wrote to 17 ASX-listed companies with all-male directors warning they could face similar action unless they appointed a woman to the board.
“It is our view that diversity matters not just as a social end in itself but in a value point of view. Diverse groups generally provide better outcomes than non diverse groups,” Ian Silk, AustralianSuper chief executive, told the Financial Times.
“We are seeking to optimise the value of companies in the interests of our members. We are not seeking to cause problems for the sake of it,” he added.
The push on gender diversity is part of a wider focus on environmental, social and governance criteria by Australia’s superannuation industry, which is the world’s fourth-largest pool of retirement savings. The sector, which benefits from mandatory contributions by employers, is increasingly using its financial clout to influence companies’ governance policies.
Gender diversity has moved up the political agenda in Australia over recent years and in 2015 the Australian Institute of Company Directors (AICD) set a voluntary target of achieving 30 per cent board representation for women by the end of 2018.
The target and increasing pressure by pension fund shareholders have been factors in prompting female board representation to climb from 21.7 per cent in 2015 to 25.3 per cent in 2016 — the highest in Asia Pacific. Some 13 ASX 200 companies have no female directors, according to figures provided by the AICD.
The Australian Council of Superannuation Investors, an umbrella group that represents pension funds that own 15 per cent of shares in ASX 200 companies, has set its own target of 30 per cent female board representation by 2017.
Louise Davidson, chief executive of the Australian Council of Superannuation Investors, said the body would be recommending that all its members begin voting against senior directors in companies that have not met the target in the annual meeting season beginning in September.
“We feel the progress on gender diversity has been too slow and companies are missing out on a superb talent pool,” she said. “I think our systematic policy [to recommend negative votes against directors] covering a group of pension funds is a world first.”
The pension funds’ campaign has caught the attention of company boards. Six of the 17 companies that AustralianSuper wrote to about a lack of women directors — Aveo, Flexigroup Limited, Galaxy Resources, Independence Group, Regis Resources and Western Areas — have recently elected women to their boards.
One of the 13 ASX 200 companies without a female director told the FT it was in the process of board renewal and was hopeful of appointing a female director.
Jake Klein, chief executive of Evolution Mining, said the gold miner already had a diverse board in many ways but did recognise the need to add gender diversity. “A process to do that has started and we expect to appoint a new non-executive director later this year,” he said.
Qube Holdings, which is also renewing its all-male board, said it was “committed to appointing directors and employees on the basis of merit and takes into account broad issues of diversity including gender diversity”.
(Published by Financial Times - May 28, 2017)