Green Dream with Aegon’s Beacham: Pushing for diversity from the grassroots to the top

Aegon's Miranda Beacham discusses diversity engagement and linking ESG to remuneration

FTSE companies should be given credit for moving on from the masculine ‘Dark Ages’ of the 1990s to where we are today with over a third of boards made up of women – but organisations now need to look at the grassroots and overall organisations to improve gender diversity, says Aegon’s Miranda Beacham.

In this Green Dream video, the head of ESG for equities and multi-asset, discusses engagement priorities for the firm, including diversity and inclusion, and how they have made progress in this area with several companies.

She also shares how she believes ESG should be linked to remuneration.

Watch the full video interview above and read the transcript below.

NK: Hello, Natalie Kenway and welcome to the Green Dream. Today I’m with Aegon Asset Management’s Miranda Beacham. Thank you so much for coming in. Can you tell us a bit about what you do at Aegon Asset Management?

MB: Of course, yes. I’m the head of ESG for equities and multi-Asset. So part of my remit is really helping ESG integration into the equities and multi-asset platforms, as well as conducting all the research and engagement and stewardship associated with the funds that we run there.

NK: Fantastic. And what are the key engagement priorities at the moment for the firm?

MB: So the engagements over the past year have been quite consistent with previous years. Climate change obviously a high priority for a lot of investors, we are seeing a lot of movement going on there, but you need to be inclusive of biodiversity. It’s very closely interlinked and we need to keep up the pressure to make sure that the Paris goals are being attained.

Secondly, diversity and inclusion. Something close to my heart, something we’ve been engaging on the past eight or nine years, we’ve seen huge movements in board level, but we’re looking that organisational level and also widening out the diverse characteristics we’re looking at.

And finally, health and wellbeing. That’s been a big topic over Covid, making sure that the most vulnerable are getting access to the medicines that they need. But there’s still a lot of work to do in supply chains, ensuring health and safety of workers and in countries, as well as keeping up the pressure of making sure that medicines get to accessible areas.

NK: Okay, perhaps you could share some of those success stories there where you’ve seen real progress that companies.

MB: At the company level, in climate change in particular, SSC have managed to improve their scoring in the Net Zero Company Benchmark.

They’ve been doing some great work setting goals in the medium and long term as well as written a great report on the just transition, which is something that we’ve been focusing on as well.

Then on amore thematic level, with diversity & inclusion I mentioned that we have been engaging a that over the past eight or nine years; we’ve seen huge improvements going on at board level, but in some very particular companies, looking at Softcat, it had a very masculine board, quite a masculine organisation. We’ve been talking to them for years and it is so great to see the progress that they’ve been making and making sure that they’re helping women in the organisation at grassroots level right up to management, but also quite a lot of other interesting, diverse projects that they’ve been undertaking as well.

And then in America, Tetra Tech is a company that’s a little bit shy, talking about what it did. It actually does have good, diverse stories to tell, [so we have been] working with them to improve their disclosure, to make the company more attractive. Because if you don’t make the company more attractive, people can associate with the company in question, it’s a kind of self-fulfilling prophecy in that you won’t attract people that will become a more diverse organisation. So disclose yourself [is the] first step and then it goes a long way.

NK: Let’s stay on that diversity point then. We’ve seen board diversity or gender diversity at the board level improve very, very slightly. But we’re still not seeing that the gender pay gap is closing. We’re still not seeing some groups reports on ethnic minority pay gaps, for example. What do you what would you like to be seeing more of the companies? And on the disclosure point, where can they be more transparent?

MB: I think we have to take a moment not to focus on the negative. We really have to take a moment to look at what actually has been achieved. I try to look back at what boards were like when I first started in ESG and discovered that 1996 was the Dark Ages. And actually the only data point I could find was for the FTSE company. At that point only had around 6% of directors that were women.  According to the FTSE women leaders report last year, that’s grown to 34% In the FTSE 100 and it’s over 40% in the FTSE 350 –  that is a great achievement when you think about where it came from.

And that really was a result of concerted effort from not only regulators but governments of shareholders, of NGOs, of clients… A huge amount of effort from a huge number of people has driven quite a bit of change at board level.

But we need to focus on what is going on underneath board level. So, right from the grassroots all the way up through the organisations, we need to make sure that these companies are representative of the communities they work in, the markets that they operate in, their suppliers, the clients, the customers and employees to make sure the best decisions are actually being made.

When it comes to the gender pay gap, having started at the top and made some progress to make that more representative of society, we now need to keep that pressure to make sure that they are improving matters further down the organisation. But it is going to take time. The gender pay gap is all about the movement of women up the organisation and get to open those opportunities and to provide the training to allow that progression to happen is going to take time, but we just need to keep on monitoring it and keep the pressure on to make sure that is actually happening.

When it comes to ethnicity pay gap, data is a problem. That is a problem a lot of the time, but when you come to talking about ethnicity, pay gaps and you’re really asking the employees to hand over some quite valuable information, and that can be problematic because people can be quite guarded and they don’t understand what that information is going to be used for, or they don’t have wholehearted trust in the management. They’re just not going to hand over that data. And I’ve, you know, looked at quite a number of companies that are managing to do it. And I’ve seen some amazing stats come back of around 90% of employees handing over that data to allow the company to make that progress because they had to trust in the management, all the way down to companies for that, only getting a quarter or a third response.

And that’s just not representative, is it? I mean, if you’ve only got a quarter of a third of your employees telling you that kind of data, you can’t understand where you are and you can’t set a strategy based on that kind of information.

NK: Okay. Let’s go back to broader ESG. And how do you think that should be linked to remuneration?

MB: Well, obviously, as a head of ESG, I would like to see it linked to remuneration, but it has to be proportionate. I wouldn’t want to see the majority of remuneration based on ESG metrics that are a little bit wooly. So as is the case in any kind of remuneration measurement, I would like to see it aligned to strategy,  to be stretching yet achievable, but also easily quantifiable. The core belief in ESG really is that good ESG management of material items is going to lead to good long term financial performance. So it will help drive forward some agenda, such as climate, getting emissions under control, etc. But we do have to trust the fact that if we are managing our material ESG issues well, that will feed through to remuneration in the long term.

So yes, I would like it, but with some caveats.

NK: Okay, great. That’s a really interesting way of looking at things. And we always end the Green Dream with this question. What is your favourite sustainable drink or snack?

MB: Well, I am quite fortunate to live in Edinburgh and to have a garden and to be able to grow some things in it. I grow raspberries, pears and cherries and so that has to be quite sustainable. It’s all grown organically. It’s not always healthy though, because a lot of that goes into home baking. But I would say that that would be my favourite.

NK: Okay, great. Thank you very much for your time today. Great speech to you, Miranda.

MB: Thank you.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...