CPPIB increases efforts to promote board diversity
BY Staff | December 24, 2018
In an effort to increase board diversity, the Canada Pension Plan Investment Board will establish a policy to vote against the chair of the board committee responsible for director nominations at its investee public companies if the board has no women directors.
“We believe that companies with gender-diverse boards are more likely to achieve superior financial performance over the long-term. For that reason, engaging with companies to drive better corporate behaviors is a key part of CPPIB’s mandate,” said Mark Machin, president and CEO of CPPIB in a press release. “We have been addressing board-effectiveness issues in our portfolio for many years and hope more institutional investors will join us in advocating for diverse boards.”
The issue of encouraging gender diversity on boards is not new for CPPIB. In 2017, it cast votes at the shareholder meetings of 45 Canadian companies with no women directors and undertook efforts to engage with these companies and a year later, nearly half of those companies had appointed a woman director, CPPIB said.
“Diversity on boards is critically important,” says Camilla Sutton, president and CEO of Women in Capital Markets, noting the important role institutional investors play when it comes to making change.
The CPPIB’s announcement is an important step forward and there is a business case for its decision, she says. “I think it’s a really important step forward- not just from the diversity angle- but also there’s a real business case around better business results with broader diversity and I think that that’s exactly what [CPPIB] is highlighting here with its decision.”