A reminder that despite a global pandemic other critical issues remain front of mind—among them gender diversity in the boardroom.

Axa Investment Management, the €804bn French fund manager, has introduced some of the most stringent voting policies on gender diversity in the business.

From next year Axa says it will impose a 33% diversity target for investee companies in the developed world and will begin challenging emerging market companies to have at least one female director on their boards, or 10% of places on larger boards.

While progress has been made on gender boardroom representation in recent years, there are concerns. In November the Hampton-Alexander Review said FTSE 100 companies would miss this year’s 33% gender diversity target unless appointments were dramatically changed.

Yo Takatsuki, head of ESG research at Axa, repeats what companies have been told many times over the past few years: studies show that a gender diverse board leads to higher profitability, overcomes “group-think”, triggers innovation and debate, and leads to improved gender diversity across all levels within organisations.

“The introduction of our 33% target for listed companies in the developed world and new policy for companies in emerging markets and Japan,” said Takatsuki, “is the next critical step for us as we continue to build on our voting policies around gender diversity, and make the most of our rights as an investor to engage companies in productive dialogue that makes a tangible difference.”

Hardening stance

The investment manager’s announcement represents a significant hardening of its stance over gender. It comes after a year in which its focus was on pressing companies to “proactively seek gender equality at every level”.

Axa is now in tune with the Hampton-Alexander Review. It’s voting record over the previous year was somewhat behind. The fund manager voted against reports and accounts in developed market companies where the boards were all-male;  against chairs and nomination committee chairs in the UK FTSE All Share where less than 25% of the board was female; and against the nomination committee chair in the US where female representation on their boards was less than 20%.

2019 saw Axa target 272 companies over gender diversity, up on the previous year’s figure of 58. It voted against proposals 245 times based on gender diversity criteria, up on the previous year’s 45.

Earlier this year the Hampton-Alexander Review, along with the Investment Association, wrote to the chairs of 63 companies in the FTSE 350 warning them that their all-male executive boards needed to change. The letter revealed concern about progress on the topic, despite big improvement and much attention on gender issues.

That followed November’s report that revealed concerns about the FTSE 100 making its 33% diversity target. It said the appointment rate for women as board members would have to be as high as 50% to bring the target within reach. Though the FTSE 250 had improved on its appointment of women, it too was in danger of missing the target.

That makes 2020 a critical year for the gender balance across big company boardrooms. Policies like Axa’s will certainly up the ante as the fund manager ratchets up its standards, but as the Hampton-Alexander Review found, many boards remain recalcitrant.