Investors pressure for more diverse boards
In 2018, British asset manager Hermes included in its voting policy for Brazilian companies the presence of at least one woman on their boards of directors. About three years later, Brazilian Jaime Gornsztejn, head of corporate governance at Hermes, says "progress has been little" and pressure for more diverse boards will grow in 2021.
In a letter sent to board chairmen and executives, Hermes is recommending a vote against the election of boards of directors where at least 20% of candidates are not females. Globally, Hermes manages $614 billion in assets, in addition to representing institutional investors in pension funds from several countries. "In other markets, our expectation is to reach 30%, but in Brazil we still see a percentage of only 11.5% of women on boards. Companies do not seem to realize that gender diversity increases the efficiency of boards, leads to better decisions. It is imperative," Mr. Gornsztejn says from his office in London.
A more activist stance by investors regarding gender diversity, climate change and purpose beyond profit, among other aspects, appears in a new report by Russell Reynolds. The consultancy listened to more than 40 global institutional investors and activists, pension fund managers, proxy advisory firms and corporate governance professionals and identified six trends that will impact boards and executives in 2021.
The first of them shows that, if the pandemic pushed the "S" (social) of ESG (environmental, social and governance practices) to the top of the corporate agenda, in 2021 climate change "will be back in the spotlight." The rise of Joe Biden to the presidency of the United States and the country's adherence to the Paris Climate Agreement, the expectations of BlackRock, the world's largest asset manager, for companies to incorporate zero carbon targets by 2050 and the COP26 are some reasons for greater pressure on boards. "It is not just a matter of the company waiting for legislation or determination. Climate change will have an impact on everyone - and we need to understand the risks and opportunities now," says Mr. Gornsztejn.Working for diversity remains a priority for all regions covered by the survey. The third trend involves the need for boards to adapt to assess sustainability reports standards (which should converge amid the proliferation of rules in recent years) because they will begin to be more accountable for these metrics and results by stakeholders. "This year the tendency...
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