Leaders of these gender diversity indexes may surprise you

It will take years before Covid-19 can fully assess the damage done to the cause of gender equality. What is clear now is that it is a big setback. The pandemic recession in early 2020 was called a “dropout” because it had a disproportionate impact on women’s overvalued hospitality, tourism and retail industries.

Meanwhile, the United Nations (UN) has warned about the “lost decade.”“It is estimated that women’s employment worldwide will decline by 54 million in 2020, as work is underway towards gender-related goals and the burden of family care is primarily on women’s shoulders. , Report of the Women and Equality Committee Assessing the impact of pandemics on gender equality, we find that “for many women, pandemics exacerbate existing equality issues.”

So it’s no wonder that gender diversity has become a more urgent consideration for some investors. This is partly a matter of social justice. But economic factors are also involved.Study from McKinsey, Credit suisse, Others link gender diversity to better corporate performance. The “cognitive diversity” that results from combining workers from different backgrounds improves decision making. And women often outperform men in their educational background, and gender diversity is expanding the talent pool.

Morningstar’s Gender Diversity Index focuses on the share of companies that promise equal opportunity and access. The index incorporates 19 gender-related criteria, reflecting a wide range of stock markets. Index analysis suggests that investing in gender lenses is related to both values ​​and values.

How do you evaluate gender diversity?

Lack of transparency is a formidable obstacle to corporate-level gender studies.according to EquileapOnly 17% of Morningstar Index specialists and partners publish information worldwide on gender pay gaps and lasting and detrimental differences in women’s and men’s salaries. Equileap praises the UK for requiring companies with more than 250 employees to report on the gap. In the United States, only 8% of companies voluntarily report.

Company-level disclosure informs Equileap’s Gender Equality Score, which is the basis of Morningstar’s Gender Equality Index. Approximately 4,000 companies spanning 23 developed markets in Asia, Europe and North America form the universe.

However, good research on diversity, fairness, and inclusiveness needs to be exceeded. While it is important to measure representatives at different levels of the enterprise workforce, policies such as parental leave are also important for a comprehensive workplace. Equileap evaluates 19 criteria within four broad categories:

  • Gender balance between leadership and workforce.
  • Equal compensation and a balance between work and life.
  • A policy that promotes gender equality.
  • Commitment, transparency, and accountability.

Equileap evaluates a company’s legal records of gender discrimination and sexual harassment, as it is also important to look at actual behavior.

Morningstar’s Gender Diversity Index is derived from the equity benchmarks for comparable large and mid-capitalization stocks. They hold almost the same stocks as the parent index, but because they are weighting their constituents, companies with higher scores are overvalued compared to market capitalization, and companies with lower scores receive lower weights than the market. increase. Companies involved in gender-related legal proceedings are excluded.

Global Gender Leader

So which company has a high score for gender diversity and a higher weight than the market in Morningstar’s Gender Diversity Index?

National Grid, a UK utility, is one of the highest-scoring companies in the world for gender equality. According to Equileap, it is one of only 19 companies in the world with no gender pay gap. On the representative side, National Grid has achieved gender equality in board and executive positions. The company has a strong gender policy, pays living wages and offers generous parental leave.

Intuit, a US accounting software provider, has been able to claim gender diversity within its executive rank and has enacted policies on abuse, equal opportunity, and whistleblowing while promoting career development. We also pay attention to gender diversity within the supply chain. Intuit receives partial credit for wage inequality and the size of parental leave.

Takeda Pharmaceuticals stands out in Japan in terms of executive rank, managerial level, and gender diversity across the workforce. The healthcare business offers parental leave and flexible work, and maintains a strong policy on training, abuse, whistleblowers, and diversity within the supply chain.

Airport operator Aena is one of Spain’s many high-scoring companies. Introduced new reporting requirements between 2019 and 2021 to combat gender discrimination, earning high scores for gender diversity at the executive and managerial levels and policies including generous parental leave and flexible work Did.

Risk mitigation

What can we learn by analyzing the composition and behavior of Morningstar’s Gender Diversity Index as of the first quarter of 2022? From a sectoral perspective, they spend more weight than the market on:

  • utility;
  • Consumer defense;
  • energy.

Indexes, on the other hand, tend to be below the weight of the market.

  • technology;
  • Basic material;
  • industrial.

According to Equileap, utilities tend to get high scores for gender diversity, training and career development, and comprehensive recruitment at the board level. Meanwhile, the tech sector is wrestling with female representatives and has a history of sexual harassment.

Regionally, indexes are severely restricted to deviations from market weights. However, most of Equileap’s highest scoring markets are in Europe, including France, Spain, Sweden and the United Kingdom. Australia is also a leader primarily due to strong gender equality laws, but the state does not require paid parental leave.

On the other hand, the United States, Hong Kong and Japan have the lowest scores. According to Equileap’s 2022 Gender Equality Global Report and Rankings, less than 10% of companies in these three markets report on gender pay gaps, compared to 92% in Spain, the world leader. The gender diversity of Japanese companies is the lowest in the developed markets.

How about returns? Morningstar’s Gender Diversity Index has no long history. So far, their returns are similar to the market by design. Inevitably, the index is slightly above the market in some conditions and lagging in others.

Interestingly, the Gender Diversity Index is less volatile than its predecessors in a wide range of stock markets to date. During the downmarket, they generally made less losses. This favors companies with economic moats, or sustainable competitive advantages, as shown in Morningstar’s risk model, and companies with strong financial characteristics. It is due. These attributes tend to be more stable than relative revenue over time. Therefore, the results are promising.

Gender diversity, like many criteria that apply to environmental, social and governance investment frameworks, does more than just make the world a better place. Companies that create an inclusive culture are leveraging a complete talent pool of the workforce while benefiting from cognitive diversity. Not only can they advance the cause of human rights, but they can also maximize shareholder value.

Leaders of these gender diversity indexes may surprise you

Source link Leaders of these gender diversity indexes may surprise you

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