Engaging on gender diversity without using proxy voting
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.
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.
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 a sampling across issues and geographies. 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.
We consider that the integration of sustainability risks in the decision-making process is an important element in determining long-term performance outcomes and is an effective risk mitigation technique. Our approach to sustainability provides a flexible framework that supports implementation across different asset classes and investment teams. While we believe that sustainable investing will lead to better long-term investment outcomes, there is no guarantee that sustainable investing will ensure better returns in the longer term. In particular, by limiting the range of investable assets through the exclusionary framework, positive screening, and thematic investment, we may forego the opportunity to invest in an investment that we otherwise believe likely to outperform over time.
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