Norges Financial institution Funding Administration desires extra ladies on boards

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Norges Bank Investment Management, the world’s largest wealth fund with oversight of $ 1.3 trillion, said boards of directors of companies where women make up less than 30 percent of the total should consider setting gender diversity targets.

The company, which has interests in around 9,200 companies worldwide and owns 1.5 percent of all listed shares, has published a position paper declaring that it wants to end the “persistent under-representation” of women on company boards.

“Although diversity has many different dimensions, we are particularly concerned about the ongoing underrepresentation of women on boards. Such underrepresentation can indicate that a panel is over-recruiting and lacking a clear view of the full range of backgrounds and skills required to be effective. Based on our experience in markets with mandatory gender quotas for company boards, we do not believe that gender diversity will crowd out other qualifications, ”the Oslo, Norway-based fund said in the paper.

“As a long-term global investor, we also fear that companies with no different boards of directors will not be able to maintain the trust of their customers, investors and society over time.

“This position will serve as the basis for our discussions with company boards.”

Norges Bank Investment Management is known for advancing boards of directors on issues such as environmental, social and corporate governance.

“What we want to see is better representation of women on boards of directors,” Carine Smith Ihenacho, Norges Bank Investment Management’s chief governance and compliance officer, told Reuters.

“Diversity is good for the board because it offers a better perspective, is better for decision-making, and is increasingly important for the legitimacy of companies.

“[A lack of female representation] could also be a red flag that a company doesn’t have a good process to recruit the best director. “

Carine Smith Ihenacho, Chief Governance and Compliance Officer of Norges Bank Investment Management

In 2003 Norway became the first country in the world to introduce a gender quota, according to which almost 500 companies, including 175 companies listed on the Oslo Stock Exchange, have to increase the proportion of women on their boards to 40 percent. The UK aims to have 33 percent women on FTSE 350 bodies.

At the upcoming annual general meeting, the Norwegian Fund will vote against the appointment of nomination committees for companies that do not have at least two women on their boards.

“We’ll start with developed markets and companies where women are underrepresented, with large and medium-sized companies in the US and Europe,” said Smith Ihenacho.

She did not reveal names, but candidates for attention could be British automaker Aston Martin and online used car auction company Copart in the US, each with a woman on their boards.

The Fund will not vote against if companies can add a “very good explanation such as a clear plan with clear goals or a recent resignation that affects the gender balance on this body,” she added.

Last year, the fund voted against the nomination boards of 16 companies, all large and medium-sized companies in the US and Europe, for all having male directors, she said. One of them was Domino’s Pizza, listed in London, fund data showed. The company has since appointed two women to its board of directors.

“What is relevant for all countries is that women are generally underrepresented and that is why we have a goal,” said Smith Ihenacho.

Worldwide, 17 percent of company boards do not have a single woman, she said.

“We really believe that diversity leads to better thinking, better creativity and better business,” Nicolai Tangen, CEO of Norges Bank Investment Management, told Reuters.

“The more diverse the group of people who sit together, the more creative the solutions and the better the business. You get better innovations, better solutions. It’s just fine. “