At least 30% of FTSE 350 boards should be female by 2020 and at least 33% of leadership teams in FTSE 100 companies should be female by 2020, under the voluntary guidelines of the Hampton-Alexander review, which was launched by the government in February 2016 to improve gender diversity at the top of UK companies.
Hermes is a strong supporter of the review, said Amy Wilson (pictured), who is responsible for UK and US engagements at the fund house’s stewardship service Eos.
Wilson said: “With the target for that fast approaching we would expect many companies to have already made good progress. But somehow others have quite a bit of work to do.
“This year we’re going to be toughening up our voting guidelines when it comes to diversity. This year we will consider voting against the chair of a FTSE 100 company where women are materially less than 30% of the board or less than 25% for the FTSE 250. For the first time, we will be taking voting action on the executive committee in terms of gender diversity as well. For a FTSE 100 company in 2019 that has an all-male executive committee, we will consider voting against the chair.”
A similar approach would apply to climate change and the firm would consider voting against chairs who are not taking enough action on the environmental issue, she said.
In 2018, the Eos team at Hermes recommended voting against the chair of the nominations committee of a number of companies on the basis of insufficient gender diversity on the board, including Smurfit Kappa and Segro in the UK.
Smurfit Kappa was named and shamed by the Investment Association in April 2018, when the industry body wrote to 35 companies in the FTSE 350 arguing their gender diversity among senior roles was behind standards expected under the Hampton-Alexander review. St James’s Place and Provident Financial also received letters from the Investment Association asking them to explain their all-male executive committees.
Hermes said it is currently finalising the companies it will be targeting during AGM season.