Tuesday, March 17, 2009

New Gender Index launched

Pax World Management, one of the original SRI mutual fund firms in the United States, has teamed up with KLD Research and Analytics to launch a Gender Index Series. This series is sponsored by the International Finance Corporation, a member of the World Bank Group, as part of it’s Gender Entrepreneurship Markets program. It was announced last week on, when else - International Women’s Day.

There will be five indices, three regional, North America, Asia Pacific, and Europe, which are sub indices of the Global Women Investment Index. The fifth index is the Global 100 Women Investment Index, representing the top 100 women friendly companies around the world.
The eligible universe from which companies will be chosen is the FTSE All-World Developed Index, and KLD will rank companies on four primary areas: board representation, workplace representation, programs and polices, and controversies.

This is welcome news for a couple of reasons. First, it draws attention to gender and diversity as ESG concerns which have unfortunately taken a back seat to other social and governance issues. In the current round of Annual Meetings a resolution was brought by MEDAC as follows, “Since there are currently numerous men and women qualified and seasoned to fulfill expectations and prerequisites to become board members, it is proposed that the board of directors adopts a policy stipulating that 50 percent of new candidacies proposed as board member be women until a parity of men and women be reached.” This garnered a mere 5 -6% of votes. Corporate Canada continues to say that they are actively seeking women for Board vacancies and don’t need this push, however, the numbers tell a different story. The Catalyst Census found that in 2008, “women’s representation as corporate officers rose to 16.9 percent, an increase of 1.8 percentage points since 2006 and greater than the 1.1 percentage point increase from 2002 to 2006. The increase in women’s representation among corporate officers was driven by private and crown corporations. Women’s representation among corporate officers of public companies remained stagnant. (italics mine). Meanwhile, since 2002, approximately one-third of FP500 companies have had no women corporate officers.”

Second, it will help us to quantify the effect of gender and diversity practices in companies. And this may well help with increasing the numbers. There is significant anecdotal evidence that more women and minorities in senior management and on boards leads to better financial performance. There are also numerous studies on individual social and governance factors that demonstrate this outperformance. However, there are still far too many fence sitters in corporate management saying ‘show me the money’. Perhaps, with the advent of these indices, we will soon be able to do that.

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