A new policy from the Australian Council of Superannuation Investors recommends their members vote against the re-election of male directors at Australian Securities Exchange-listed companies that do not have women in at least 30% of their board seats.
ACSI’s new voting policy takes effect in July and extends to companies in the ASX201-300 listings, in which women hold an average of 34% of all board seats.
ACSI noted that women currently hold almost 36% of all ASX200 directorships, up from 19.7% in 2015.
“It’s positive to see the significant shift towards greater board diversity in the ASX 300. For investors, this means boards are accessing a larger talent pool which provides more diverse skills and backgrounds to draw on,” said ACSI CEO Louise Davidson in a statement. “However, these averages mask a lack of progress in many companies, such as the 97 companies in the ASX 300 which fall below the 30% mark.”
ACSI and its members are also encouraging companies to develop a timeframe within which they will achieve gender balance of 40% men, 40% women and 20% open seats on their boards.
“Having 30% gender diversity on Australian boards has shifted from a target to aspire to to a minimum standard,” Davidson said. “We have updated our policy to recognize market standards and support continued improvement. There’s a fair way to go—even in the top 200 companies there are still 54 who fall below 30%. Ultimately though, we hope that this policy becomes obsolete in the next five years as Australian companies build and maintain gender balanced boards.”
ACSI notes that properly constructed boards “draw on a range of criteria, including gender, ethnicity and age, in addition to core skills and experience.”
With the updated policy in place, ACSI may recommend during the 2023 AGM season that its members vote against existing directors of ASX 300 companies with poor gender diversity, with a focus on those most accountable for board succession and composition.
“As always, our voting recommendations will be combined with direct company engagement and applied on a case-by-case basis,” Davidson said in the statement. “While around 100 companies could currently face ‘against’ recommendations, we believe that, following engagement, the number will be much smaller.”
“We hope that by working with companies to drive change we will see further progress and commitments,” Davidson continued. “However, recommendations will be made against companies which make no progress at all.”
ACSI has written to ASX 300 companies advising them of the new policy.
This article initially appeared in sister publication FS Sustainability, which, like CIO, is owned by Institutional Shareholder Services Inc.
Tags: Australian Council of Superannuation Investors, Australian Securities Exchange, board diversity, Louise Davidson