SSGA to focus on Canadian and Japanese board diversity

State Street Global Advisors (SSGA), which kicked off a high-profile campaign this year to boost the number of female directors by installing the Fearless Girl statue near Wall Street, is continuing its mission to make boardrooms more diverse by expanding its focus to Canada and Japan.

SSGA intends to provide board diversity guidance to 1,200 companies in these two countries by the start of 2018. Of the 700 companies listed on Toronto Stock Exchange (TSX), 40 percent have all-male boards, while 55 percent of companies listed on Japan’s TOPIX 500 lack women in the boardroom, according to SSGA’s announcement.

The move comes in the wake of recent news that 16 institutional investors in Canada, representing $1.7 trillion in assets under management, are calling for 30 percent female board representation at TSX-listed companies by 2022. That initiative was co-ordinated by Canada’s 30% Club Investor Group.

Companies with 25 percent or more female board representation have better stock market performance records than peers with one female director or fewer, according to recent research.

STATE STREET’S DIVERSITY DRIVE
SSGA kicked off its board diversity campaign in March 2017, when it sent letters to 600 companies in the US, the UK and Australia informing them that they would vote against the chair of their nominating committee if there were no female directors or candidates (CorporateSecretary.com, 11/7). Nine months on, 42 companies have committed to increasing diversity in the boardroom and seven have already added women to their board.

‘Our goal is to have an impact,’ Rakhi Kumar, head of ESG investments and asset stewardship at SSGA, tells Corporate Secretary. ‘These are multi-year engagement issues. You can have an impact in your first year, and those companies that have responded would not otherwise have added women, but you really start to see change within two or three years.’

The asset manager has also shown it’s willing to bare its teeth, having voted against 400 companies that have not initiated any efforts to increase board diversity since receiving the warning letter in March.

HOW TO ENGAGE WITH SSGA
Kumar tells Corporate Secretary that there has been an increase in the number of requests for meetings from issuers – but that it’s not possible, or necessary, to meet with every issuer twice a year to discuss governance issues. ‘Understand that my conversations with [issuers] are long term,’ she says. ‘We know governance doesn’t change every day, or even every year.’

Outlining her tips on when and how to engage with SSGA, Kumar says:

• Visit SSGA’s website first: ‘One of the reasons we put out thought leadership pieces is that we need to explain where we’re coming from. Often people haven’t been to our website and we just send them our viewpoints [articles].’
• Explain why you’re getting in touch: ‘Say exactly what you’re looking to talk about in your email. Often companies do not put in the context of why their message is important. If you don’t agree with us, feel free to explain why our approach doesn’t apply in your situation.’
• Be thick-skinned: ‘There are many things that are being communicated that can be done by email. We don’t need to meet twice a year. If we’ve met you and we say no to another meeting, don’t be offended.’