(NEWSManagers.com)
– How to accelerate the feminization of boards of directors in the world? If France maintains its lead, thanks to its restrictive regulations, the rest of the world is still far from 40% of women. To encourage companies to progress, BNP Paribas Asset Management has just drastically strengthened its voting policy for 2023. The management company now requires a minimum of 35% women on boards in Europe and North America, compared to 30% in 2022. ; and a minimum of 20% in Asia, Latin America and the Middle East, compared to 15% last year. A real challenge, since only 43% of the companies invested by BNPP AM respect this threshold of 35%, and 27% that of 20%, levels already higher than those of the market. “Our proactive policy aims to help companies move forward on diversity issues,” continues Michael Herskovich, Global Head of Stewardship at BNP Paribas Asset Management. As part of our discussions with them, we take into account the timing of board rotation, with directors serving on average between 8 and 12 years. We understand that renewals, and therefore feminization, can take time”.
If these new requirements are not met, BNPP AM will vote once morest the male directors, in first nomination or renewal, during the 2023 AGM. However, if the company approaches the requested threshold (with a rate of feminization of 20% at 35%, or 10% to 20%) and has made gender diversity efforts, displays satisfactory ethnic diversity, has made short-term commitments to meet our thresholds, or is led or chaired by a woman, BNPP AM will temporize and will not oppose the administrators.
Target of 40% for all councils in 2025
“As of 2019, we set our first rule, asking for at least one woman on the board,” says Michael Herskovich. We raise our requirements regularly, with a target of 40% of women on all the boards of the companies in which we are invested by 2025. Today, only a third of our portfolio in Europe and 12% in North America has reached the 40 %”.
Two countries still pose a challenge, Japan (8% women on boards, and 13% in BNPP AM’s portfolio) and South Korea (5% and 10%). However, the management company notes progress in all areas. Boards worldwide have 20% women (compared to 18% in 2021). A figure that rises to 27% (compared to 25% in 2021) for the companies in which BNPP AM invests. The latter is 36% in Europe – including 44% for France, 41% for Italy and 40% for Norway – 30% for North America and 14% for Asia. “Our 40% target remains surprisingly a challenge for American companies, especially since investors are aiming for 30% instead,” notes Michael Herskovich. Ethnic diversity is a priority issue there compared to the feminization of boards, which should however be at the same level as in Europe”.
Opposition to multiple voting rights
For the 2023 general meeting season, BNPP AM is making three changes to its voting policy. On the one hand, this raising of the minimum thresholds for the feminization of boards. On the other hand, the presence of at least one ethnic minority on American and British boards. Finally, in the name of the “one share, one vote” principle, the management company will oppose members of corporate governance committees who have multiple voting rights – beyond the double voting right for long holding periods – without any clause automatic termination following five years. “If the listing act under discussion is in favor of it and in Europe, the United Kingdom and the Netherlands already authorize it, we are firmly opposed to it”, adds Michael Herskovich.
Vigilance on the say-on-climate
In addition, BNPP AM will remain very vigilant on environmental issues, in particular on say-on-climate, and on ESG criteria for executive compensation. “In 2022, we opposed 1,391 resolutions for environmental and social reasons, and 79% of the 40 say-on-climate proposed by companies, recalls Michael Herskovich. In case of dissatisfaction, we vote once morest the re-election of directors, do not give discharge, or, as a last resort, do not approve the accounts”.
The key to progress remains the quality of shareholder engagement. Last year, “following dialogue with our 40 strongest positions on diversity issues, half of these companies improved their proposal,” concludes Michael Herskovich. How to stay optimistic!