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Pipeline Seen as Overlooked Part of Push for Women on Boards

May 30, 2018, 3:24 PM

State Street Corp., one of the investment firms leading the push for more women on corporate boards, is calling attention to the pipeline for getting them there.

Board members often come from the executive leadership of other companies, but State Street says it’s hard to tell how many women are in those roles due to a lack of disclosure. So now the $2.8 trillion asset manager is asking companies it owns for more data on women in management.

“For a number of years, us and many other investors have been focusing on increasing the number of women on boards,” said Robert Walker, managing director and head of Europe, the Middle East, and Africa on State Street’s asset stewardship team. State Street, BlackRock Inc., and other investors championing gender diversity have been motivated in part by research showing that companies with women on their boards outperform companies with all-male boards.

State Street has put pressure on more than 700 publicly traded companies with only men on their boards since it installed a Fearless Girl statue across from Wall Street’s Charging Bull last year. More than 150 of those companies have added at least one female director, and another 34 companies have pledged to do so. The firm has also voted against directors at more than 500 companies that haven’t diversified.

“I think we’ve been overly focused on the board and not recognized that you have to have a pipeline for women coming onto the board,” Walker told Bloomberg Law. He said there isn’t much transparency into how many women are in that pipeline because companies haven’t felt as much pressure to provide such data.

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Lagging Behind

Statistics from the European Institute for Gender Equality show there are fewer female executives than board members in Europe, where State Street is starting its data drive. The firm plans to expand the effort into other regions eventually, as it’s done with its board diversity campaign.

Women represent about 25 percent of board members at the European Union’s 600 largest publicly listed companies, according to the institute’s data. But just 5 percent of chief executive officers and 15 percent of executives at these companies are female.

“One reason it’s easier to diversify boards is they’re small in size,” said Deborah DeHaas, vice chairman and national managing partner of consultant Deloitte LLP’s center for board effectiveness. Boards usually have about 10 members, so adding a few new directors can have a big impact.

It also takes longer to hire and promote women into corporate leadership, DeHaas said.

Diverse Board, Diverse C Suite

Bringing more women into the boardroom might help companies increase the number of women in executive ranks over time, research by Catalyst Inc. suggests. The nonprofit group dedicated to advancing women in leadership has found that the more women a company has on its board, the more women it will have as corporate officers five years later.

Catalyst says the two might be related because companies where more board seats belong to women have more inclusive workplace cultures, policies, and programs. It could also be because female directors serve as role models and as an antidote to gender stereotypes.

The analysis showed that having female board members increased women’s representation in corporate roles responsible for profit and loss, like manufacturing, rose even more so than their representation in other areas such as human resources.

“I think that’s another critical piece,” said Brande Stellings, who leads Catalyst’s consulting services and its program for mentoring female director candidates. “Not only how many women are in senior management,” but what roles they’re in, she said.

‘Professional Directors’

Efforts to add women to boards may also be having an unintended effect of taking some women away from management.

Research by Deloitte shows countries such as Norway, France, and Germany have boosted the number of women in boardrooms by setting gender diversity quotas for companies. Norway, the first in the world to enact such a quota, now has more women in its boardrooms than any other country in Europe.

But a female director at a large European company told State Street’s Walker that quotas are encouraging some women to leave their senior management roles and become “professional directors.”

“She felt that was an unintended consequence of these quotas, that you’ve drained the number of women from management because they’ve left these positions to become directors,” he told Bloomberg Law.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Fawn Johnson at