Engaging on gender diversity without using proxy voting

  • ISSUE

    As one of the founding members of the Board Diversity Hong Kong Initiative, we champion gender diversity on boards for better leadership and improved corporate governance. Ultimately, we believe diversity increases performance and competitiveness for both companies and their shareholders.

    We engaged with a Chinese consumer staples company on both gender diversity and environmental topics. The company had a large female customer base but no women on the board.

    It’s rare to see a consumer staples company with zero female representation among its directors since gender diversity of consumer-related boards is often the highest for all primary sectors.

     

  • ACTION

    Initially, we shared academic studies justifying the positive correlation between the board gender diversity ratio and financial returns. In addition, we highlighted the company’s lack of board gender diversity compared with other Chinese and global consumer peers and asked the company to add at least one female director to its all-male board.

    We shared our findings with other investors in the Board Diversity Hong Kong Initiative and encouraged them to raise the same issue with the company, a key issuer in the market due to its size, sector, and potential for impact. 

  • OUTCOME

    We leveraged pending regulatory requirements and contributed to the Hong Kong Exchange’s and Clearing’s (HKEX) consultation paper, which proposed to end single-gender boards with a three-year transition period. We explained how this would require companies to set targets and timelines for gender diversity at the board level and across the workforce, and this consultation was subsequently concluded and passed into effect.

    We engaged with the company to reiterate the importance of increasing the number of female directors on its board, offering coordination with the 30% Club Hong Kong to help search for qualified candidates.

    The company later added its first female director to the board in early 2022. 

The case studies shown here are for illustrative purposes only; do not represent all of the investments made, sold, or recommended for client accounts; and should not be considered an indication of the ESG integration, performance, or characteristics of any current or future Manulife Investment Management product or investment strategy.  

Manulife Investment Management conducts hundreds of ESG engagements each year but does not engage on all issues or with all issuers in our portfolios. We also frequently conduct collaborative engagements in which we do not set the terms of engagement but lend our support in order to achieve a desired outcome. Where we own and operate physical assets, we seek to weave sustainability into our operational strategies and execution. The case studies shown are illustrative of different types of engagements across our in-house investment teams, asset classes and geographies in which we operate. While we conduct outcome-based engagements to enhance long term-financial value for our clients, we recognize that our engagements may not necessarily result in outcomes which are significant or quantifiable. In addition, we acknowledge that any observed outcomes may be attributable to factors and influences independent of our engagement activities. Our approach to ESG investing and incorporation of ESG principles into the investment process differs by investment strategy and investment team. It should not be assumed that an investment in the company discussed was or will be profitable. Actual investments will vary, and there is no guarantee that a particular fund or client account will hold the investments or reflect the characteristics identified. Please see our ESG policies for details.

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