State Street Global Advisors’ (SSGA) Fearless Girl campaign – which has inspired companies and shareholders in the last 22 months worldwide to focus on bringing more women onto their boards – is expanding to the Gulf Cooperation Council (GCC) region.
The development was initiated by SSGA’s team based in Dubai, which became a member of the 30% Club GCC in mid-2018.
As part of the asset manager’s drive for change, it analyzed and compared the level of gender diversity in the GCC, which comprises six countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
It examined 170 blue-chip companies across the region and found that only 23 of them (14 percent) have at least one female board director. But it notes in its Guidance on enhancing gender diversity on boards in the GCC countries report that the economic opportunity for increasing gender diversity in GCC countries is significant.
Citing a recent McKinsey study, which suggests that full gender equality in the GCC’s labor market could add $830 bn to the region’s economy, SSGA says directors in that part of the world have an important role to play in increasing gender diversity on their boards and throughout their organizations.
‘For us there is an economic rationale for looking at [the GCC] and, to be honest, that economic rationale was always the reason why we started to look at gender diversity in developed markets, too,’ Robert Walker, head of EMEA asset stewardship at SSGA, tells IR Magazine.
Fresh economic reforms
SSGA’s focus on the GCC is further cemented by fresh economic reforms in the region to include more women in the workforce. For example, Saudi Arabia is aiming to increase female participation in the workforce from 22 percent to 30 percent by 2030, and the UAE has plans to become one of the top 25 countries in the world for gender equality by 2021.
In addition, index providers MSCI and FTSE have taken the decision to include Saudi Arabia, Kuwait, UAE and Bahrain in their emerging markets indexes. MSCI also tells IR Magazine it will add 32 Saudi Arabian stocks to its emerging markets index – representing 2.6 percent of the benchmark – in May this year in a two-step process.
‘There is a realization [in the GCC] that current levels of gender diversity need to grow,’ says Walker. ‘This is great because we have experience of engaging with other companies across the globe on the issue and have a good story to tell [companies in the GCC] on diversity.
‘We can take those best practices and insights and give them to the companies in the region that are not doing so well. The more companies we can get on track to deal with this issue, [the more] we’re raising the quality of the index – and by doing that we add value.’
Considering the fact that investors, companies and governments need to collaborate to pick up speed on gender diversity in the GCC, Walker reveals that SSGA will not be taking voting action against companies with no female directors on the board in the region.
Instead it will aim to facilitate female directors on the board through ongoing engagement with wider stakeholders in the market such as Abu Dhabi’s main regulator, the Abu Dhabi Global Market Financial Services Regulatory Authority.
‘But the question is: how can we guide companies in the region to do this? That is the starting point of our report, which recognizes that the region is looking at the issue,’ Walker adds.
The report provides six tips on how GCC countries can enhance gender diversity on boards. These include assessing current levels of diversity on boards, establishing goals, identifying ‘diversity champions’ to support the initiatives, and intensifying the search of potential candidates beyond existing director networks. The tips also cover the need to consider female directors for leadership positions and enhancing transparency and communication with investors about the board’s position on diversity.
Translating these guidelines into goals, Walker notes: ‘I would hope that within three to four years companies in that region will be comfortable about talking to investors about diversity as well as having that ongoing conversation in terms of women on boards and at senior management level.
‘The biggest thing is that the companies are open and willing to talk about [gender diversity]. But it is all about listening: it is a two-way street and we also have to listen to [companies’] concerns and challenges.
‘Our conversations with companies in the region are not ‘sit-down one-time’ kind of meetings: we are concerned about forging long-term relationships, particularly once a company enters an index. We can’t sell it [then] – we are holding onto that company for as long as it remains in that index.’
Fearless Girl in other parts of the world
SSGA continues to see progress at companies in other parts of the world where gender diversity programs have been initiated. Its gender diversity campaign started in March 2017 when it installed the Fearless Girl statue on Wall Street in New York City. Its campaign has reached the US, the UK, Australia, Japan, Canada and continental Europe.
Since then, 1,228 companies have been identified as not having a single female board member, with the US topping the list. SSGA notes that there are 816 companies in the US currently lacking a woman on the board.
The asset manager is preparing to take action and vote against the chair of a company’s nominating committee if there are no female directors or candidates, or if the firm has not engaged with SSGA for three straight years. This will start with the US, the UK and Australia in 2020, followed by Japan, Canada and continental Europe in 2021.
So what does success look like for SSGA’s Fearless Girl campaign? ‘Success for us is the 300-plus companies that have so far added a woman to their board,’ Walker concludes. ‘That is success and we will continue to engage with companies where they do not have a woman on the board.’
