Below is an excerpt from ISS ESG’s recently released paper “Gender Diversity and Performance – The Links Are There, But… #itscomplicated” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.
KEY TAKEAWAYS
- Linking EVA Margin (Profitability) and Quality (P-R) to a company’s level of gender diversity on the board can provide opportunities for additional alpha.
- Avoiding companies with low Quality measures and a low ratio of women on the board can be a good risk management policy at the portfolio level.
- Companies that have already achieved minimal – assessed as one third – female board representation also have a higher level of EVA Profitability and an overall higher Governance Quality Score (GQS).
- While this analysis finds unambiguously that higher levels of female board representation are associated with stronger performance in terms of EVA Margin, the finding that levels just below 50% produce the best performance-related outcomes bears further research, as does the impact of sectoral influences on these results.
By Gavin Thomson, Integrated Portfolio Management, ISS ESG
