OBJECTIVES

As asset owners and asset managers, we are responsible for the stewardship of the investments we make on behalf of our members, investors, partners and clients. Part of that responsibility includes the assessment of the Boards of our investee companies. We believe Boards that genuinely embrace diversity, as manifested through appropriate gender representation, with a broad spectrum of skills and experience, are more likely to achieve better outcomes for investors. There is increasing research to support this hypothesis. Please see "Reference Shelf" for examples. 

ENGAGEMENT

Signatories will seek to engage with companies where there is evidence that there is a lack of gender diversity at the Board or in the company.  Our aim is to build a constructive relationship with company Boards and management to foster a greater awareness and acceptance of the business value of diversity, reflected in greater diversity on Boards and at companies over time.

Some investors may consider voting against the re-election of the Chair of the Board or Nomination Committee where there continues to be no evidence of Board diversity and engagement with the company has not led to any satisfactory outcome.

STEWARDSHIP

As part of our overall stewardship responsibilities, on behalf of our members, investors, partners and clients, signatories will actively engage with investee companies on corporate governance issues, including the process used to identify suitable candidates for the Board.

To provide investors with a comprehensive understanding of an investee company’s diversity policies, we expect companies to be transparent regarding their strategic management of diversity issues. Therefore, in addition to the recommendations of the Stock Exchange of Hong Kong Limited (the “Exchange”) consultation paper, “Review of the Corporate Governance Code and related listing rules”, we will request the following additional disclosures:

  • The procedures used to identify new members for the Board, and how that process ensures a Board characterized by diverse backgrounds and skill sets;

  • The governance structure of the diversity policy;

  • Why the Board believes the diversity policy is beneficial to the company; that is, an articulation of a compelling business case for gender diversity in the entity as part of the business strategy, and whether there are internal procedures to review the effectiveness of the diversity policy;

  • Initiatives the company has in place (if any) to address diversity in senior executive positions, and whether those initiatives are measured and evaluated;

  • The percentage of women in senior executive roles, and whether the Board sets any measurable targets for increasing gender diversity at senior management; and

  • Any work undertaken or policies on pay equity, including analyses of gender-based occupational segregation (where lower-paid roles are primarily occupied by women).

INVESTOR STATEMENT

Please join us in the effort to promote diversity and sign the Membership Form. The Investor Statement is available here.