In its 2023 Proxy Voting Guidelines, Ontario Teachers’ Pension Plan (OTPP), one of the world’s largest pension funds, is reinforcing its existing focus areas for publicly traded companies to set higher expectations for increased participation of women in board roles.
Highlighting OTPP’s longstanding belief in the benefits of diversity and desire to see continued corporate progress in this area, the Guidelines advocate for large-cap companies on developed market indices to seek to increase their board gender diversity to a minimum of 40% representation of directors identifying as women, up from the prior expectation of a minimum of 30% set out since 2013.
Supporting data indicates that there is momentum around gender diversity at large public issuers in developed markets. Across most of the developed markets OTTP invests in, the average gender diversity on boards exceeds 30%. In addition, a handful of developed markets including France, Italy and Norway have adopted a minimum of 40% women on boards.
“Although we still consider a 30% goal to be meaningful, we’re raising the threshold to challenge public companies in developed markets to keep improving as we strive for truly diverse and representative boards,” said Anna Murray, Senior Managing Director and Global Head of Sustainable Investing. “We believe improved diversity is key to board effectiveness, leads to better performance and delivers long-term value for shareholders.”
Clear and timely diversity-related reporting continues to be a central focus in the Guidelines. To improve transparency on the progress public companies are making regarding board diversity, OTPP encourages companies to separate diversity disclosure between gender and other forms of diversity. As part of these existing efforts, the Guidelines suggest expanding disclosure reporting of board members to include those who self-identify as non-binary in addition to those identifying as women or men.
The Guidelines continue to ask boards to set and disclose timebound targets to increase the number of board directors identifying as a member of an underrepresented group. Reporting on achievements against those targets and the use of self-disclosure are also encouraged as they demonstrate a commitment to creating boards that are diverse beyond gender.
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