Norway's wealth fund pushes for more women on emerging market company boards

ESSA Pharma

06/03/2024 09:00

By Gwladys Fouche
       OSLO, March 6 (Reuters) - Norway's $1.6 trillion
sovereign wealth fund, the world's largest, will call on
emerging market companies in which it invests to appoint more
women to their boards, top officials told Reuters, making the
policy global for the first time.
    One of the world's largest investors, the fund holds stakes
in around 8,800 companies globally, owning about 1.5% of all
listed stocks. It has set the pace on a range of issues in the
environmental, social and governance (ESG) field. 
    Since 2021, the fund has pushed companies to boost the
number of women on their boards and to consider targets if fewer
than 30% of directors are female, focusing first on Europe and
the United States, and expanding the policy to Japan last year.
    The policy will now be applied to companies in emerging
markets, including from nations such as India, South Africa,
Brazil and Egypt, the fund said in its updated voting guidelines
shared with Reuters ahead of their publication on Wednesday. 
    It would mean that companies such as Qatari telecoms firm
Ooredoo  ORDS.QA , Indonesian industrial company ESSA  ESSA.JK 
and Brazilian logistics firm Hidrovias do Brasil  HBSA3.SA ,
which have currently no female directors, could be affected.
    The fund's push could be a challenge in countries where the
pool of candidates is smaller than in the developed world, and
comes amid some signs of a public backlash in the U.S. against
the drive to bring diversity to the top of organisations.  
    Since 2021, the fund has seen "great improvements" on gender
diversity on boards, its chief governance and compliance
officer, Carine Smith Ihenacho, said in an interview,
highlighting Europe, where a combination of state regulation and
best practice guidelines has boosted female director numbers. 
    Yet, "we have been thinking for a long time that we also
need to vote in countries where this is actually more of an
issue," she said.
    "In some developed markets and emerging markets that is
where we are really seeing women lagging behind." 
    In practice, this means that if a company in emerging
markets does not include at least one director of each gender,
the fund will vote against the election of the chair of the
nomination committee - or the chair of the board if there is no
nomination committee - at an annual general meeting.
    In developed markets, the fund will continue to vote against
if the board does not include at least two directors of each
gender.
    
    LAGGARDS 
    The new voting guidance is expected to affect some 5% of
companies in the fund's equity portfolio, said Amy Wilson, the
fund's head of stewardship.
    "Our voting policy is there to address laggards and bring up
the lowest performers, to close the gap up with our
expectations," said Wilson.
    Overall, around 60% of companies in the fund's portfolio are
still below the expectation of at least 30% representation of
each gender on boards, she said.
    The fund has been "pleased" to see progress on gender
diversity at Hollywood studio Warner Bros Discovery  WBD.O  and
pan-European bourse Euronext  ENX.PA , it said. 
    Both had one female director each in 2022, leading the fund
to vote against the companies. They now each have three female
directors.
    The fund also toughened its policy for South Korea,
Singapore and Poland, which had been exempt from the gender
requirement even though the Norwegian investor had already
classified the three nations as developed economies.
    Those nations, along with Japan, will be required to have at
least one member of each gender on the board, reflecting slower
progress overall on gender diversity on boards, a "less mature
pipelines of senior women", and "smaller pools of female
directors", Wilson said.
    So far, the fund has not divested from a company because it
did not respect its gender diversity requirement and nor is it
planning to, Smith Ihenacho said.
    "I think on this issue it is much better to be a vocal
investor," she said. 
    The fund's policy has had some unexpected outcomes. In one
case, the fund had to vote, two years in a row, against the
chair of the nomination committee of a company that did not have
a single man on its board. 
    The firm? Lingerie company Victoria's Secret  VSCO.N .

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Market value of Norway's wealth fund    https://tmsnrt.rs/3iZIGOn
EXCLUSIVE-Norway wealth fund tells firms: put more women on your
boards    https://www.reuters.com/business/sustainable-business/exclusive-norway-wealth-fund-tells-firms-put-more-women-your-boards-2021-02-15/
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 (Reporting by Gwladys Fouche in Oslo
Editing by Mark Potter)
 ((gwladys.fouche@tr.com;))