Goldman Sachs’ $2.3trn fund arm to vote against companies that have too little diversity
- GSAM said all publicly-traded firms must have two women in their set-up
- It also wants all FTSE 100 firms to have at least one ethnic minority director
- The changes form part of the group’s reforms to its proxy voting policies
The investment division of Goldman Sachs has vowed to vote against publicly-traded firms if they do not sufficiently improve diversity at the senior level.
From March next year, Goldman Sachs Asset Management (GSAM) said it wants all companies on the S&P 500 and FTSE 100 to have at least one director of an ethnic minority background.
All global publicly-traded businesses with at least ten board members must also have two women in their set-up, or it has said it would vote against the nominating committees of their boards.
Male-dominated: Though the proportion of women on boards of publicly-traded companies in the UK has risen in recent years, few have a woman as chief executive
Meanwhile, firms in the United States will receive an automatic thumbs-down from GSAM if they do not have a single woman on their board.
The changes form part of the group’s reforms to its proxy voting policies, which aim to influence the behaviour of companies in which it invests, meaning that thousands of businesses are potentially affected.
Heather Miner, the chief operating officer of GSAM, said: ‘Our approach to stewardship is grounded in Goldman Sachs’ focus on advancing sustainability and inclusive growth.
‘These latest enhancements to our voting policy will keep Goldman Sachs Asset Management at the forefront of driving greater diversity and inclusion on boards around the world.’
The reforms come more than 18 months after Goldman Sachs’s chief executive David Solomon announced at the World Economic Forum in Davos that the banking giant would not underwrite the initial public offerings of firms that lacked a ‘diverse board member’.
Soon afterwards, another two major investment firms, Columbia Threadneedle and RBC Global Asset Management, promised to vote against public companies that did not have at least a quarter of their boards represented by women.
More women: Goldman Sachs Asset Management wants all global publicly-traded businesses with at least ten board members to have a minimum of two women in their set-up
The proportion of women on boards has risen significantly in recent years, with women now occupying a third of all board seats on FTSE 350 firms compared to just 12.5 per cent a decade ago.
Only 18 of these businesses have a female chief executive, though, with insurer Aviva, Premier Inn owner Whitbread and pharmaceutical manufacturer GlaxoSmithKline among the few with a woman occupying the top post.
A fortnight ago, some of Britain’s most prominent companies launched a campaign called 25×25, the goal of which is to have a quarter of all chief executives at blue-chip FTSE 100 firms be a woman within the coming four years.
Sponsors of the initiative include Unilever, Morgan Stanley International, the Royal Air Force, BAE Sytems, and oil supermajor BP, whose boss Bernard Looney is the campaign’s lead ambassador.
Katie Koch, co-head of the fundamental equity business within GSAM, said: ‘Boardroom diversity is an important source of diverse thinking at the highest level of every company and is an important driver of corporate performance.
‘We have continued to increase our expectations with respect to boardroom diversity as momentum behind more stringent requirements continues to grow.’
Catherine Winner, the head of stewardship for GSAM, said: ‘Our proxy voting policies allow us to create a stronger framework for the companies in which we invest on behalf of our clients.
‘We see active proxy voting and engagement on diversity and other issues as a critical part of our role as stewards of our clients’ capital.’