The debate over gender diversity making economic sense is “moving from the theoretical to the empirical”, according to Julie Bech (pictured), portfolio manager within the diversified equity team at Nordea and responsible for its Global Gender Diversity strategy.
The $225m fund only invests in companies demonstrating sustainability and a high level of
gender diversity and equality in management, which Bech states will lead to equal opportunities throughout the organisation.
On International Women’s Day, the portfolio manager shares with ESG Clarity what it is like to run a Global Gender Diversity strategy, various regions’ and sectors’ progress, engagement priorities and other positive trends.
What type of companies are you investing in for this fund? What are the key criteria?
When actively selecting investment opportunities, we look closely at gender diversity indicators. The level of diversity in higher leadership levels, promotion and career development opportunities, inclusion and the change in these gender diversity indicators are all considered to give us an indication of the level of diversity and inclusion (D&I) in the company, the areas it excels, and where it needs to step up. This information is also used in the engagement process.
The companies in our investment universe must all live up to a minimum threshold in relation to gender diversity. This threshold is based on gender diversity in higher leadership levels, as cultural change in an organisation needs commitment from the top. Breaking the glass ceiling and ensuring equal opportunities in top levels will benefit women throughout an organisation going forward.
The debate over the connection between gender equality and stock performance is rapidly moving from the theoretical to the empirical – as evidence mounts demonstrating gender diversity can indeed make economic sense.
See also: – Gender diversity progress on investment managers’ exec committees flagging
How has gender diversity progressed in the different sectors you invest in?
The progress towards gender equality has historically been slow. Succeeding in gender equality requires, among others, changes in society norms and values, as well as in legislation. The obstacles are different from country to country and from industry to industry. That said, there are lots of things companies can do to speed up the process towards a more diverse and inclusive work culture.
Even though our aim is to be fairly region/sector neutral relative to the benchmark, we do have natural underweights, as it can be hard to find companies living up to our minimum standards in some areas. In Japan and emerging markets, many companies do not live up to our gender diversity standards. In terms of regions, our fund is overweight Europe and North America. In terms of sectors, we are overweight information technology and healthcare.
At stock level, many tech firms have come under scrutiny for gender discrimination, but Microsoft has been proactive to improve in this area over recent years. It continuously attracts the industry’s best talent by offering a strong combination of pay and benefits, as well as professional development. Further, Microsoft is a solid performer in relation to privacy and data security and has also committed to becoming carbon negative in 2030.
How do you engage and support companies on improving gender diversity? What do they need the most help with?
Nordea is supporting companies to deliver real change through engagement with them. The ongoing dialogue us to put forward our expectations on corporate behaviour, and to support companies to enhance sustainability performance.
The investment team is supported by Nordea’s broader responsible investments (RI) team, which engages with the companies held across all strategies. The RI team meets company management, and management visits are one of the several active ownership tools used in the engagement process. We also hold research meetings with other stakeholders to better understand a company’s ESG performance.
As mentioned, the business case for gender diversity is now well-documented. It is generally perceived as a driver of corporate value creation and as a competitive advantage. Groups increasingly recognise gender diversity is a major aspect to consider in order to remain competitive.
What are your key themes and priorities for portfolio holdings over the coming year?
Groups in general still have work ahead in terms of D&I and there is also room for new investment opportunities to arise. Gender diversity is still very much a competitive parameter. There are great bottom-up investment opportunities in groups displaying a high level of gender diversity and equality, as well as those showing a positive trend in increasing and promoting gender diversity and equality.
Speaking more broadly, one of the most significant milestones recently was the creation and distribution of the UN Sustainable Development Goals (SDGs). The SDGs have already played a big role in empowering society to achieve a more sustainable world. Although environmental elements have attracted most of the attention, as our understanding of sustainability evolves, we expect more focus to be paid on the social SGDs – including SDG 5, Gender Equality.
See also: – PRI: Improving diversity can help address climate change