Go directly tomain navigation, search input field or thecontent

The importance of diversity and inclusion

21-09-2017 |

This year we reconnected with some of our investee companies to follow up on previous engagement efforts on the topic of diversity. We promoted action and better balance and have plans to continue our efforts.

Diversity relates to aspects of gender, independence, age, sexual orientation, nationality, culture, ethnic background, expertise, professional qualifications, experience and education. Usually however, it is gender that is the key issue for companies. Women comprise half of our global population, but the disparities between men and women in economic activities remains significant. Women are more likely to work in low-paying jobs, and are more likely to be subjected to harassment and discrimination. When working in the same or similar jobs, women are usually paid less than their male counterparts. Even in boardrooms, members are mostly (middle-aged, white) men. According to the fifth edition of Women in the Boardroom: a global perspective by Deloitte, only 15% of global board seats are held by women, yet this is a three per cent improvement over figures of two years ago. Data on other aspects are difficult to find but in general most boardrooms do not show a very diverse picture.

Diversity as a driver for sustainable business

Triodos values diversity and inclusion in workforces and management functions, and at the board room table. Board diversity increases the opportunity for different viewpoints when responding to challenges, and can stimulate innovation. It can inspire a more diverse workforce, equal opportunities, and more sustainable companies. And with alternative perspectives comes improved access to relevant expertise, a better understanding of markets, suppliers and customers, and higher problem-solving ability. Several studies indicate that companies with more diversity in executive and/or supervisory boards usually perform better financially. In addition, companies with more female board representation have a stronger environmental and social performance, and have less governance issues.

What we’re doing to promote diversity

Triodos has many gender diversity leaders in its Sustainable Investment Universe and portfolios, in particular the large cap portfolio. However, smaller pioneer companies are still lagging behind. In general, these companies have less developed corporate governance standards, often with their founders at the top and on the boards. European regulators have started to debate the importance of board diversity, stating reasons of social and corporate citizenship, and some countries have already implemented gender quotas.

In 2015 we called upon companies in our investment portfolios to disclose and improve policies, programmes and targets on gender equality, particularly in relation to board composition. We learned that many companies improved board (gender) diversity following annual general meetings. Training and education were often used to increase awareness of the importance of diversity, and many companies started developing new programmes to increase diversity within their entire organisation and on their board. At that time however, only very few companies set actual targets.

In 2017 we again called upon companies in our equity portfolios to develop specific targets on gender equality and board diversity, and to publicly disclose their policies, programmes and targets. From the companies that responded, there were a few stand-out performers. Swedish bank Svenska Handelsbanken has a 50/50 gender balance on its’ Supervisory Board. Pioneering tech company Power Integrations has only one woman on its Board, but has diverse nationality and ethnicity representation. Canadian National Railway is also strongly committed to diversity and has implemented several programmes. It also reports well on progress, and has been recognised as one of Canada’s Best Diversity Employers.

Our next steps

Triodos will continue to raise awareness about the importance of diversity and inclusion to reduce inequalities. We will actively use our voting power at company annual general meetings to ensure that the companies we invest in understand the value we place on diversity. As an example, in upcoming annual general meetings, we will not be supporting the election of newly appointed board members if the gender balance is skewed and the election does not improve the balance. We will also continue our engagement on diversity and strive for boards with people from different backgrounds.

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.

Integrated approach & intensified engagement

Hans Stegeman joined Triodos as Head of Research and Investment Strategy in February 2017. He will lead the team of investment analysts when the Triodos SRI proposition brings asset management in house. In this interview, Hans shares his thoughts about the opportunities these changes will bring to Triodos Investment Management and its SRI Funds.

Engagement report