Last year, the Luminous Strategy and Insight team analysed the stewardship reports of the largest 20 institutional investors to understand the cut-across themes in relation to governance. The findings provide a comprehensive picture of investor priorities and expectations, and offer unique insights into how investee companies are meeting those expectations.
Unlike for their workforce, most companies in our sample have set targets for increasing diversity at Board level or at least aspire to include diversity in succession planning.
Another striking finding of our analysis is that half of companies don’t seem to have emerging Board skills, such as sustainability, but only a small minority plan to increase these skills and only one company has set a timebound target, suggesting that seven years after the Paris Agreement these are still seen as relatively unimportant.
Our findings
In the context of our Reporting Matters 8 study, our key findings are as follows:
- Half of companies (50%) don’t mention emerging Board skills, such as sustainability, and only 10% plan to increase these skills.
- While 88% of companies use infographics to illustrate gender diversity at Board level, less than half (45%) do so for Board skills and only one-quarter (25%) do so for ethnic diversity
- Most companies (86%) have set targets for increasing gender diversity at Board level, but this number is evenly split between those (41%) who aim for female representation of 40% or more and those (45%) who are satisfied to be compliant with the Hampton-Alexander Review target of 33%.
- Likewise, there is an even split between companies that already have a female Chair, CEO, CFO or SID (43%) and those that don’t even mention this as a target (42%).
Our recommendations
- Familiarise yourself with FCA and FTSE Women Leaders targets for gender diversity
- Link your diversity and inclusion strategy to succession planning
- Evaluate emerging Board skills and consider boosting them
- Explain how your values shape your culture and use external metrics to monitor it
At our launch event on 20 July, Luminous’ Stephen Butler, Investor Engagement & ESG Disclosure Director, Rachel Madan, Sustainability & Impact Director, and Nina Kefer, Senior Consultant, along with Claudia Chapman, Head of Stewardship at the FRC, and Lindsey Stewart, Director, Investment Stewardship Research, shared the outcomes of our Reporting Matters research. They also offered practical advice on defining, reporting and engaging around ESG strategy, as well as how to integrate ESG in your Annual Report.
If you would like to access the recording and slides from our event, please get in touch.
Stephen.Butler@Luminous.co.uk
