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Diversity and inclusion – an update on progress
Diversity is an integral part of sustainable development and has always been important to us as investors, employers and as members of society.
“Inclusivity does mean innovation. The more inclusive you are, the more debates you can have, the less hierarchy you have, the faster it is to recover from failure… If you say everyone should ‘talk like me, look like me, be like me, have the same background as me’ – I don’t think that would work well for companies.” Nisaba Godrej, Chairperson of Godrej Consumer Products
We believe diversity1 is an integral part of sustainable development and is important to us as employers, investors, and as members of society. We understand that diversity needs to go hand in hand with equity and inclusion to make a real difference. We believe that the willingness to
include diverse perspectives helps to generate better ideas and leads to better decision-making. We have worked hard to address diversity and inclusion at Stewart Investors over the years and are committed to continual learning and improvement. We set out our approach in our diversity statement. Our commitments are summarised below:
1. Allocate capital to high quality companies that are continually improving their own approaches to diversity
2. Use our influence as investors to encourage companies to take positive diversity actions through (direct and collaborative) engagement, proxy voting and policy advocacy
3. Continue to evolve our own approach to diversity, including hiring, remuneration and career progression
4. Report transparently and regularly on our own successes and failures as an employer, an investor and within our communities
In this article, we provide an update on our activities as they relate to the four commitments set out in our statement.
1. Allocate capital to high quality companies that are continually evolving their ownapproaches to diversity
We select high quality companies that are contributing to sustainable development using a long-term perspective. We believe a company’s approach to diversity, equity and inclusion “DE&I” is an important driver of long-term success and forms part of our quality assessment prior to investment. Most of our research is proprietary but we supplement our own bottom-up analysis with third-party research on complex issues. This research helps us to identify leaders and laggards in sustainability. An example is our 2019 research tender on “Improving Gender Diversity in Companies”. Our article on diversity - an indicator of distinctive cultures references this research from the University of Technology, Sydney.
Companies with a strong approach to diversity perspective include Beiersdorf, Godrej, Halma and Tata Consultancy Services. You can take a look at our Portfolio Explorer tool (linked) to see all of the companies that we invest in and issues that they are helping to address.
Beiersdorf
Beiersdorf is committed to developing and retaining a diverse workforce and building an inclusive company culture. In addition to corporate strategy, DE&I is driven by a global network of more than 100 employee champions and various grassroot communities. These communities embed inclusivity into Beiersdorf’s culture from the bottom-up. They also partner with external organisations to advance their agenda, for example Generation Rainbow, Changemaker 50+ and Sozialhelden.
Beiersdorf announced its “Gender Parity Ambition“ on International Women‘s Day in 2021. They committed to achieving a 50/50 gender balanced leadership across all management levels worldwide by 2025 and reached this target 18 months ahead of schedule. The representation of women in management positions worldwide stands at 50.3% as of 1 September 2023. Since January 2023, the female Board representation is 42.9%2.
Godrej Consumer Products
Godrej is committed to being an equal opportunities employer and takes a progressive approach to inclusion. In 2018 they published a manifesto on trans inclusion. Godrej also supports the Confederation of Indian Industry Code of Conduct for Affirmative Action which seeks to improve access and opportunity for scheduled castes and scheduled tribes. Their commitment to LGBT +3 inclusion includes a gender-neutral anti-harassment policy, gender transition support and gender-neutral washrooms.
Godrej is setting up a manufacturing facility near Chennai which will lead to the creation of hundreds of jobs with an inclusive and gender-balanced work-force. They plan to employ 50% female employees alongside 5% from LGBTQ and PwD4 communities. More information is available on their website.
Godrej’s flagship social initiatives, Salon-i and Beautypreneur, train and work with women in the beauty industry. Salon-i is a vocational beauty training programme for young women in India, focussing on urban areas and weaker socio-economic sections of society. Beautypreneur incubates beauty and wellness entrepreneurship, enabling women to train other women which enables them to expand their enterprises. Since 2012, more than 284,000 women have been trained through these programmes. An impact assessment showed a threefold increase in trainees participating in paid work, of which 78% were first-time entrants to the workforce5.
Halma
DE&I is one of Halma’s key sustainability objectives. The company aims to create an inclusive culture where everyone has equality of access, opportunity, and treatment. Please watch our video, moving the dial on diversity and inclusion with Jennifer Ward, Group Talent and Communications Director at Halma, to learn more about their approach to DE&I. Halma’s commitments are detailed here. Key aspects of their approach include:
- senior leadership commitment
- shared purpose and mind-set
- inclusion comes first - there is no point in having more diversity if it is not heard
- focusing on IQ and learning agility in recruitment, rather than not having done a specific role for a number of years
- managing recruiters very actively
- practical, behaviour-based learning - just highlighting bias does not change it
- breaking down gender role norms – for example, parental leave and flexible working
- Continuously monitoring types of roles and career progression to manage the pay gap
Halma is targeting a 40 – 60% gender balanced range on company boards by the end of March 2024. Female representation has increased from 26% two years ago to 30% this year. Two of the three Sector Chief Executives who lead their portfolio of companies are women. The gender ratio of their next generation of leaders is 42% female . Their latest Gender Pay Gap report details their commitment to addressing the gender pay imbalance through inclusive and diverse recruitment. This is supported by their Future Leaders Programme. Improved work-life arrangements, such as their global parental leave policy, support their commitments to gender equality. Halma has made considerable progress on gender diversity over the years. As of 31 March 2023, 55% of the Executive Board positions were held by women (compared to zero in 2014)6 & 7, while 45% of its Board were female (increased from 18% in 2014). 48% of all senior roles are held by women. The gender pay gap has narrowed from 26% (2021) to 19% (2023)8.
Halma has committed to increasing racial and ethnic diversity across their businesses and is a signatory of Change the Race Ratio, a campaign founded by the Confederation of British Industry to increase racial diversity on boards. 28% of their senior leaders are from an ethnically diverse background8.
Tata Consultancy Services “TCS”
TCS believes that a diverse and inclusive workforce is necessary to drive innovation and creativity. Their global workforce includes 153 nationalities and 35.7% of their employees are female. In addition to DE&I policies, they have 13 employee resource groups (for example LGBT+) that enable employees to share common concerns and find solutions.
TCS is the founding partner for a number of diversity initiatives in India, including Computer Science for All, STEMconnector, Million Women Mentors (MWM), and the Women’s Business Collaborative. TCS has over 2.7 million mentors for girls and women in science, technology, engineering, and mathematics (STEM) through MWM. Their outreach has enabled thousands of women, underserved youth, and veterans to start careers in technology9.
We have the privilege of continually learning from the companies we invest in as they evolve and this enables us to put what we learn from their good stewardship and strong cultures into practice within our own organisation.
2. Use our influence as investors to encourage companies to take positive diversity actions through (direct and collaborative) engagement, proxy voting and policy advocacy
Our 2019 research tender on “Improving gender diversity in companies” formed part of our response to the lack of diversity at board and management level for some companies in our investable universe. This research tender aimed to highlight a set of policies, tools, and approaches to support the retention and recruitment of women. The University of Technology in Sydney completed the research and the report is publicly available on their website. More details on the research tender are provided in this article. We shared this research with the management teams of the top ten companies in each of our strategies and engaged on the relevant issues.
Recently our engagement on diversity has focussed on the gender diversity of senior management and board members, including approaches taken to improve recruitment into these positions. Over the last five years we have engaged with 17 investee companies on gender diversity at management and board level. Currently we have nine engagements ongoing. We take a long-term collaborative approach to engagement but we will eventually sell a position if our conviction in the company is impacted negatively.10
When we have the opportunity to exercise a vote to improve DE&I outcomes we vote in favour. We have voted for shareholder resolutions in favour of more transparency around diversity and on the appointment of directors. For example, in 2023 we voted against the management of a company that makes electric motors on the election of all male directors and we supported a minority shareholder proposal of a female director. We also supported a resolution to amend the executive remuneration of a baby and childcare product company to include non-financial targets (including improving diversity relating to promotions). In 2022, we supported a management proposal from a bank to adopt a gender equality and diversity policy, and a shareholder proposal requiring a software company to address racial disparities in its workforce.
On policy advocacy, we support investor groups like UK Sustainable Investment and Finance Association (UKSIF). UKSIF has an explicit commitment to policy solutions relating to “encouraging diversity and inclusion in all its forms.” There is further information available in their policy vision statement. At the firm-wide level, First Sentier Investors “FSI” supports industry collaborations designed to boost gender diversity on boards (Australian Institute of Directors’ 30% Club) and senior management (40:40 Vision, led by Australian superannuation fund HESTA). They are committed to increasing the proportion of women in investment teams and target at least 40% female investment management staff by 2033, as outlined in the Financial Services Council Women in the Investment Management Charter.
3. Continue to evolve our own approach to diversity, including hiring, remuneration and career progression
Our people are spread across offices in Edinburgh, Hong Kong, London, New York, Singapore, and Sydney. This contributes to the diversity of our team. In this video, Sashi Reddy talks about the importance of the diversity of thought within the team and its impact on our culture and decision-making. We review hiring, remuneration and career progression decisions from a diversity and inclusion perspective and have made good progress on improving the gender balance within the investment and client teams. In 2019 37% of Stewart Investors’ employees were female and in 2023 this had increased to 47%. In 2019 17% of the investment team was female compared with 36% in 202311.
Stewart Investors supports a broad range of educational projects through its charitable trusts, Maitri Trust (in Scotland) and the Tar Ra Fund (in Australia). These projects are relevant from a DE&I perspective as they aim to improve access to education. Maitri Trust has a particular focus on India and South Africa. Two examples of charitable projects we have supported are Future Asset and CAMFED. We set up Future Asset as a project to enable girls in the senior phase of high school in Scotland to gain relevant skills for careers in the investment industry. The charity was later established as an independent Scottish charity. CAMFED supports girls and young women in impoverished districts in rural sub-Saharan Africa, providing access to education and opportunity. CAMFED promotes the value of education as the foundation for social justice, women’s leadership, economic development, and climate action. There is more detail about our work with CAMFED available in this video. Other charities that we have supported that are relevant include Altiorem, GAIN UK, Stewart Ivory Educational Trust, Edinburgh Science, Preston Lodge Learning Foundation, SVA Australia and Olive Kids.
Stewart Investors is an autonomous investment group within First Sentier Investors “FSI.” FSI is responsible for managing human resources firm-wide. FSI is a B Corp and Stewart Investors is covered by this certification. The B Corp certification includes an assessment of FSI’s approach to community which includes its DE&I strategy. FSI completes an annual diversity census. The census provides a picture of its global workforce and helps to shape its DE&I strategy. The results of the census are published on page 30 of FSI’s corporate sustainability report. FSI’s DE&I strategy is detailed on page 31 of the report. Key areas of work include inclusive leadership training, enhancing the employee communities12 policy reviews, pay equity analysis, and improving the recruitment and onboarding of new starters. FSI has also set DE&I targets which can be found on page 29 of the report.
FSI’s philanthropic initiative, First Sentier Foundation, prioritises funding for organisations which address the root causes of educational inequality. As an example, the Foundation supports Plan International UK’s Boost programme. This three-year training programme tackles gender stereotypes and champions future female leaders in STEM. There is more information about the Foundation and its partnerships on pages 25 and 26 of the corporate sustainability report.
4. Report transparently and regularly on our own successes and failures as an employer, an investor and within our communities
We report on progress against our commitments in our annual stewardship review, pages 20-23. At the firm-wide level, FSI reports on its approach to diversity, including its diversity targets on pages 29-33 of its corporate sustainability report.
Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of First Sentier Investors’ portfolios at a certain point in time, and the holdings may change over time.
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Important Information
This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should consider, with the assistance of a financial advisor, your individual investment needs, objectives and financial situation.
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