Vanguard increased its efforts this year to urge companies it invests in to seek greater diversity on their boards, according to its 2019 Investment Stewardship Annual Report. But gender diversity, the fund giant says, is not enough. Company boards should "reflect all facets of diversity."
“The business case is compelling, and although it’s difficult to measure and quantify the impact of board diversity across all market sectors, our approach is grounded in both research and common sense,” Vanguard writes. “Diverse boards make better decisions, and better decisions lead to better results over the long term.”
Boards should reflect diversity in terms of gender, race and ethnicity as well as skill, experience and opinion.
The fund family is calling for companies to publish their perspectives on board diversity, disclose board diversity measures, broaden their search for director candidates, and make progress on boardroom diversity in the next few years.
