News Analysis

Boards are too male, pale and stale says €1.4 trillion investment fund

by Stephen Conmy on Sep 9, 2021

Boards are too male, pale and stale

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Dublin-based Legal & General Investment Management (LGIM), one of the world’s largest investment funds, says company boards are still too male, pale and stale and that it will vote against boards that do not have at least 30% women members.

While many prominent asset managers (investment funds) are focused on climate change and ESG, LGIM says it will also focus heavily on gender balance in top firms

What is LGIM?

It is the Legal & General group investment management division. L&G was founded almost 200 years ago. Currently, LGIM manages assets worth over €1.4 trillion.

Recently, the firm launched an equity index fund aligned with the Paris climate agreement goals, which aims to limit global warming to 1.5 degrees Celsius.

LGIM wants more diversity in boardrooms

Increasingly, LGIM is taking on the role of an activist at its shareholder meetings.

“One of the biggest things for LGIM at the moment is having a minimum of 30pc women at board level,” said the head of client business in Ireland, Richard Kelly.

Boardroom diversity is fast becoming a legal issue

The lack of diversity in boardrooms around the world is becoming a big issue for large investors and pension funds.

For example, according to the Hampton-Alexander Review, the number of women on the boards of FTSE 350 companies in the UK increased from 682 in 2015 to 1,026 by the beginning of 2021. However, LGIM says more needs to be done to increase diversity in the boardroom, and the massive fund is putting pressure on PLCs to increase boardroom diversity.

Only 22% of Irish directors are women, while 19% of listed Irish companies have no women on their boards.

If a Private Members’ Bill is passed, Irish private limited companies will need to have at least 40% female board members after three years in operation.

The Irish Corporate Governance (Gender Balance) Bill 2021, brought forward by Fine Gael TD Emer Higgins’, wants to create a law requiring large firms to ensure 40% of their board seats are taken by women.

A gender balance report would also be required annually from companies.

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