Value context and insight. lkm@koreatimes.co.kr
'Meaningful representation of women' needed in decision-making roles: BlackRock senior official
Sandra Boss, Global Head, Investment Stewardship for BlackRock.
By Lee Kyung-min
Diversity on board helps corporate performance, long-term value creation
By Lee Kyung-min
Greater female participation on company boards is vital not only to meet the fiduciary duty to clients but also to create long-term values at companies, a senior official at the world's largest investment management firm said Wednesday.
BlackRock Investment Stewardship Global Head Sandra Boss said women should not be limited merely to being elected to corporate boards but also play decision-making roles, a critical step to strengthening diverse voices in what largely remains a male-dominated arena.
“It does nothing for companies ― or our clients ― if women are elected to boards but are never put in decision-making leadership roles. We need to see the meaningful representation of women in committee chairs and chair roles on boards,” she said during a keynote speech at the 2021 International Conference of Korean Women in Finance at the Korea Exchange, Wednesday.
Organized by the Korea Network of Women in Finance, this year's international conference was held under the theme, “A Powerful Driver of Sustainable Economic Growth ― ESG Investment Stewardship and Board Diversity.” The event sought ways to increase diversity in corporate governance structures and to encourage changes in corporate culture.
More seats are needed for women at the table in the boardrooms, for this practice to be the standard and for the full strength of their voices to be heard, the global head said.
“Not only would we like to see more women on boards, but we want to see that women are set up for success. A single woman on the board can feel like a token ― I have been there, and it can be frustrating and exhausting at times,” said Boss, who has spent most of her career as the only woman in the room, or one of only a few.
“I've been part of high-performance teams and boards, where all members were valued for the quality of their ideas, contributions and impact ― valued because of their differences, not despite them.”
Behind the passionate claim is a strong conviction that companies with more diversity in leadership will be able to foster the right environment for innovation in the boardroom and by extension throughout the company. This is a key basis to avoid what she describes as the perilous dynamics of “groupthink,” the pressures of group conformity that result in collective denial and willful ignorance, undermining healthy growth.
“Our own early research across sectors on this topic indicates a positive correlation between companies with a strong representation of underrepresented groups on boards and outperformance in market valuation terms when compared to peers,” she said.
Companies have a role to play, in her view, in advancing human capital development and fostering a more prosperous and inclusive society by prioritizing diversity, equity and inclusion practices in the boardroom and in the workforce. These practices can in turn create a virtuous cycle that reinforces a positive relationship between companies and consumers.
“Investing in efforts to build a strong local workforce in the community in which it operates may bolster economic growth, which in turn may have a positive effect on consumers. Similarly, workers who resemble a company's target consumers may empathize with them more and spot opportunities sooner.”
The BlackRock executive hopes to see Korea advance rapidly beyond the recent revision whereby corporate boards of sufficiently large, listed companies are required to have at least one female board member.
Voting against directors for insufficient progress on enhancing diversity is to be expected in Korea in 2022, she said, as the revision takes effect, affecting firms with assets of at least 2 trillion won ($1.6 billion).
According to the firm's recently introduced proxy voting guidelines on board gender diversity, Singapore, Hong Kong and Malaysia are advised to have at least one woman on company boards.
The global investment firm voted against 1,862 directors at 975 companies in favor of concerns related to board diversity.
In the Americas, lack of board diversity was the leading reason for the firm's votes against management in the 2020-2021 proxy season.
“Engagement and voting by BlackRock and other asset managers are playing an increasing role in advocating for greater diversity in the board room. Progress on board diversity is very much the result of a concerted effort from across the ecosystem.”