Calling efforts to diversify boardrooms “unacceptably slow,” Oregon State Treasurer Ted Wheeler is calling on corporations to pick up the pace. Research shows that companies perform better when they have more diverse corporate leadership and workforces, yet statistics indicate that many corporations have made scant progress adding women, people of color and LGBT members to their boards.
White directors hold 85 percent of the board seats at the largest 200 S&P 500 companies — and the percentage of those boards with exclusively white directors has actually increased over the last decade. Men occupy 80 percent of board seats at S&P 500 companies.
In response, Treasurer Wheeler is again urging companies to do more to diversify their leadership ranks, this time as part of a joint statement issued today with 13 other leaders of institutional investments who together oversee more than $1 trillion in assets.
“As fiduciaries, we are unified in the belief that the lack of diversity on corporate boards is a significant risk factor for investors,” the statement says. “Corporate boards must do better.”
Treasurer Wheeler sits on the Oregon Investment Council, which currently oversees a portfolio of $89.5 billion. He is the custodian of public funds in Oregon and, from that vantage, is responsible for the Treasury’s efforts to improve corporate governance and seek enhanced long-term share value.
As a responsible investor, the Oregon Treasury pushes for regulatory reforms and interacts directly with companies, including engaging with executives and also via proxy votes at annual shareholder meetings. The goals: improve corporate responsibility and improve profitability.
According to the joint statement, more diversity enhances long-term value, and boards comprised of individuals with diverse backgrounds and experience better serve all investors. Yet the progress of too many companies “remains unacceptably slow.”
Other signatories of the joint statement include treasurers and comptrollers of California, Massachusetts, Illinois, Connecticut, Maryland, New York State and the City of New York.
Studies suggest greater gender balance among corporate leaders contributes to higher stock values, productivity and profitability. A February report from the Peterson Institute for International Economics considered 21,980 firms from 91 countries and said the presence of women in corporate leadership positions appears to directly correlate to improved firm performance.
The new effort aligns with Treasurer Wheeler’s board diversity initiative. Since becoming Treasurer in 2010, he has employed a four-faceted strategy to highlight the business imperative to diversify boardrooms.
- EDUCATE: Highlight the value of diversity on corporate boards, and encourage a diversity of Oregonians to get involved;
- ADVOCATE: Work in powerful coalitions that combine Oregon’s political and investment influence with others;
- NEGOTIATE: Engage directly with companies as a responsible shareholder and press for changes that will improve their bottom lines; and
- NOMINATE: Use the power of the proxy to facilitate the addition of diverse voices that will help businesses to thrive and enhance shareholder value. That includes supporting the ability of major shareholders, through proxy access, to nominate candidates for board positions.
The Oregon Treasury invests a portfolio that includes the Common School Fund, State Accident Insurance Fund and the Oregon Public Employees Retirement Fund. All of those investments are guided by the obligation to seek sustainable returns.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are set by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can learn more about the Oregon State Treasury on Twitter at @OregonTreasury.
