How State Street hijacked Wall Street over gender diversity

by Greg Bright

In what was, possibly, the best publicity stunt the investment industry has ever seen, State Street Global Advisors and its smart New York ad agency, McCann, last week sent a strong message to companies to get their gender balance in order. Wouldn’t you love to hire this brave young girl?

OK, she is not a real girl. She is a bronze statue, the creation of artist Kristen Visbal, following an idea from McCann. The statue was placed in front of Wall Street’s famous raging bull in the middle of the night ahead of International Women’s Day. And she (the statue known as ‘Fearless Girl’), now famously stared down that bull. Go girl.

State Street’s aim is to get companies to have more women on their boards, foremost, but also to have more women in senior management positions. The campaign focuses on the 3,600-odd companies SSGA invests in.

The issue is actually not just about gender diversity, though, the benefits of which are well known. It’s about diversity in general – including ethnicity and diversity of backgrounds.

Amidst the whirlwind of publicity about “Fearless Girl” last week, Ron O’Hanley, SSGA’s president and chief executive, said: “A key contributor to effective independent board leadership is diversity of thought, which requires directors with different skills, backgrounds and expertise. Today, we are calling on companies to take concrete steps to increase gender diversity on their boards and have issued clear guidance to help them begin to take action.”

According to an MSCI study, SSGA sais in its various PR materials last week, companies with strong female leadership generated a return on equity of 10.1 per cent a year versus 7.4 per cent for those without a “critical mass of women at the top”, which is a 36.4 per cent increase of average return on equity.

And, according to a 2015 McKinsey Global Institute report, moving to a scenario where women participate in the economy identically to men would add up to US$28 trillion, or an additional 26 per cent, to annual global GDP by 2025 compared to a business as usual scenario.

Despite this, although there has been some progress made on the inclusion of women on corporate boards, one out of every four Russell 3000 companies do not have even one woman on their board, and nearly 60 percent have fewer than 15 percent of their boards comprising women directors.

SSGA has issued guidelines to drive greater board gender diversity through active dialogue and engagement with company and board leadership. In the event that a company fails to take action to increase the number of women on its board, SSGA will use proxy voting power to influence change – voting against the chair of the board’s nominating and/or governance committee if necessary.

Rakhi Kumar, head of corporate governance at SSGA, said: “As part of our review of boards’ gender diversity, we analyzed and compared the level of diversity in three markets: Australia, the UK and the US… Most large-cap company boards in these markets have at least one female director but have yet to fully embrace gender equality in their ranks. We believe boards have an important role to play in increasing gender diversity.”