News | ESG


Level of female directors at London listed companies reaches record high – the 30% Club


Almost a third of seats in FTSE 350 boardrooms are occupied by women, the highest level of female representation in the London Stock Exchange’s 450-year history.


Of the 3,008 directors in main market companies, 903 are women, who account for 30% of the total. This is the main finding of research by the 30% Club, a global pressure group that works to increase gender diversity in com- panies and organisations.


This means that the group has hit its minimum target a year earlier than planned. Indeed, the organisation has come a long way in the past nine years. When the campaign sent its first letter to the chief executives of all FTSE com- panies, less than one in every 10 directors around them were women (9.5%). “30% is the number at which a minority group starts to become heard and con- sidered – that target is our floor, not our ceiling,” said 30% Club global co-chair Ann Cairns.


Those pushing for more diversity in boardrooms argue that bringing different view points to a discussion can help companies make better decisions. It is


Railpen ready to punish companies for climate change risk failures


RPMI Railpen is stepping up its fight to cut climate change risk in its portfolio by preparing to vote against the re-election of chairs or senior directors who it believes are not doing enough to manage the issue. This was the headline change to its voting policy for the upcoming AGM season. It has already voted in this direction earlier this year due to concerns over the approach to managing climate risk. It identifies an issue by ranking directors for man- agement quality through the Transition Pathway Initia- tive. Those scoring 2, 1 or even 0 should not expect its support. With the organisation managing £30bn for the railway pension schemes, its shareholdings in its equity port- folio should be big enough for management teams to take them seriously. Railpen’s chief executive officer, Richard Williams, said: “As a responsible asset owner, we expect our port- folio companies to play their part in the low carbon transition. The time for action is now.” Railpen will also block the re-appointment of auditors who have worked for a company for more than 15 years.


Oil and gas companies failing to meet global warming targets


also believed that having difference voices around the table could help improve corporate performance. With the number of women involved in making key decisions more than tre- bling since 2010, this theory will be tested in the coming years as more and more women enter the nation’s boardroom. Indeed, in September Alison Rose was named as the latest woman to sit in the chief executive’s chair when she was named as the next boss of Royal Bank of Scotland. But these are recent developments. With the level of female directorships being so low for so long , it has been difficult to identify long-term trends. Indeed, research by Nottingham University in 2018 found empirical evidence is inconclusive regarding the effect female directors have on firm perfor- mance. Yet, Post & Byron’s meta-analysis of 140 studies in 2015 found that female directors have a statistically significant positive effect on accounting- based measures of firm performance, particularly in countries with strong shareholder protections. Time will tell.


Quotes about ceilings and floors aside, the big question is, if the 30% Club has reached its 30% medium target, will its directors have to change its name? It does sound a little redundant now.


Energy companies are not doing enough to tackle cli- mate change and are “inching rather than accelerating towards a low-carbon future”, a new study claims. The Transition Pathway Initiative (TPI), which is backed by BNP Paribas Asset Management, Legal & General and Robeco among others, found that not one of the 50 oil and gas companies it studied were on a pathway to keep global temperature rises below 20c as agreed in Paris four years ago.


It makes worse reading when such an important sector in the fight against global warming is compared to elec- tric utilities. Of the 59 examined 29 are working towards meeting global warming targets. TPI co-chair Adam Matthews said that too many fossil fuel companies are dragging their feet on governance and carbon performance. “This latest data is of enormous concern and the pace of change has to increase in line with the urgency of the issue. Investor engagement has to ensure compa- nies align with a pathway that keeps global warming below 20c.”


Issue 87 | October 2019 | portfolio institutional | 33


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