Growing pressure is being put on companies by shareholders to make boardrooms more representative of the workforce.
Yesterday it was reported that shareholders in US-based multinational conglomerate Alphabet, Google’s parent company, have tabled a number of resolutions demanding governance changes that they say would bring an end to a “diversity crisis”. The proposals call for median gender pay gap data for Alphabet’s entire workforce to be published.
The firm has also been urged to publish an annual report on how it deals with sexual abuse claims – following allegations that staff accused of harassment have left the firm with large “golden goodbyes”. While Alphabet has advised investors to vote against the propositions at next month’s annual investor meeting, the action shows that shareholders are becoming increasingly important in action for gender diversity.
A recent article posted by Harvard Law School showed that environmental, social and governance (ESG) proposals, under which shareholder voice concerns about social issues including gender pay equity and employment diversity, are increasing in popularity and accounted for at least 200 of 633 shareholder proposals voted on at Russell 3000 companies – leading US companies including Apple and Google – between 2015 to 2017.
Nevertheless, very few get approved and only 2.5% pass. The good news, the article says, is that more and more of these concern gender equity and diversity at senior levels and support for them is increasing. Author Angelo Martinez of corporate-research firm Equilar, Inc says: “As long as activism continues to rise, shareholder engagement regarding ESG issues will become more important than ever for companies to address and understand.”
While several large company chief executives told the UK’s Women and Equalities Committee last year that gender diversity is not as big an issue for shareholders as environmental concerns, activism on gender representation and pay, in the wake of the gender pay audits, is increasing in the UK.
Last month it was reported that Legal & General Investment Management had voted against more than 100 chairmen last year for failing to boost the number of women in their boardrooms. Since strengthening its policies last year it will now automatically vote against UK companies with less than 25% female representation at board level, and companies globally with no women on their boards, those with unexplained boosts to executive pay or bonuses above what is offered to the general workforce and over-boarded directors, defined as those who hold more than five simultaneous directorships.
ShareAction, a UK charity devoted to ‘unlocking the power of the investment system in order to benefit people and planet’, is just one of the bodies aiming to increase its focus on gender equity issues. It has launched a crowdfunding initiative to promote its Keeping Gender on the Agenda campaign which aims to “hold boards to account on gender diversity and the gender pay gap, whilst also highlighting the business and investment cases for fostering a more diverse and inclusive workforce more broadly”.
Such activism comes at a time when companies are increasingly mentioning other commercial pressures on them to diversify, including from clients and partners. In addition, more and more progressive larger companies are spreading diversity and inclusion practice down their supply chain, encouraging conversations and sharing what works.
Through ripples in the surface from all sides, the pressure to take decisive action and better reflect the world at large becomes difficult to avoid.