CPPIB will use its voting power to increase presence of women on boards.
The C$368.3 billion ($270.6 billion) Canada Pension Plan Investment Board (CPPIB) is looking to improve the gender balance of public company boards with its new Global Gender Diversity Voting Practice. Under the new policy, CPPIB will vote against the chair responsible for director nominations at the public companies it invests in if the board has no women directors.
The board cited research from financial services firm Credit Suisse and nonprofit Catalyst Inc. that has shown that companies with higher female representation earn higher returns. It also said that research and regulatory reviews of boards at major listed companies show women currently represent only 22% of directors, adding that it would take decades to reach parity even if the rate at which women are joining corporate boards were to double.
“We believe that companies with gender-diverse boards are more likely to achieve superior financial performance over the long-term,” Mark Machin, president and CEO of CPPIB, said in a release. “For that reason, engaging with companies to drive better corporate behaviors is a key part of CPPIB’s mandate.”
In the past year, CPPIB’s Sustainable Investing team added board effectiveness as a fifth area of focus, joining climate change, water, human rights, and executive compensation.
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