Investor Perspectives on Board Diversity

In recent years, public company boards have increasingly faced shareholder pressure to boost boardroom diversity. This includes diversity of skills, experience, age, gender, and race/ethnicity, among other forms of diversity. Companies should be prepared to demonstrate —via public disclosures and other forms of communication, as necessary —how they are taking a proactive approach to increasing or maintaining diversity on their boards.

This tool provides comments from an array of institutional investors and pension funds that have spoken out about the importance of diversity as a governance imperative.

Public company boards can use the following chart and the extensive comments that follow to determine what some of their major investors (and proxy advisory firms) have indicated are their priorities related to board diversity. Boards can consider their major investors’ comments when using a complimentary NACD tool—Director Tip Sheet: Discussing Boardroom Diversity With Major Shareholders—when preparing for director-investor conversations.

Pension Funds

The California Public Employees’ Retirement System (CalPERS) manages pension and health benefits for California’s public employees and retirees and their families. As of December 2017, CalPERS had $326.4 billion dollars in assets under management.

“CalPERS plans to monitor companies’ progress on board diversity and enter into engagements on a case-by-case basis. The organization has made clear its willingness to withhold votes from directors should companies’ action prove inadequate.”

“Simply put, board diversity is good for business. It is essential in today’s global economy that boards avoid ‘group think’ and ensure there is the breadth of experience, skills, and knowledge necessary to meet complex business needs.”

—ANNE SIMPSON, INVESTMENT DIRECTOR, SUSTAINABILITY, CalPERS