Gender Empowerment
At Pax World, we believe that companies with a strong commitment to gender equality and empowerment take advantage of a larger talent pool and have workforces that better reflect and understand their customer bases. Pax believes those companies that promote women throughout their organization and move them into key leadership roles benefit from the diversity of experience and perspectives in their decision-making process.
A body of research supports this belief. A 2007 Catalyst study on board diversity and financial performance1 found that those companies with the highest proportion of women on their board of directors outperformed those with the lowest percentage of women 42% to 66% on the basis of three financial indicators. Other studies have been done as well, and the majority of them indicate that those companies with higher percentages of women on their boards or in senior management outperform those that lack such gender diversity.2
There are also indications that failing to promote women results in inefficiencies both for companies and economies. As Heyman, Svaleryd, and Vlachos put it,
“Throughout the world, women earn less and are far less likely to hold high ranking corporate management positions than men. The differences in labor market outcomes between men and women are too large to be readily explained by observable differences in productivity. If women are discriminated [sic] on the labor market, this is a major source of inefficiency.”3
When evaluating a company’s gender profile, Pax seeks to determine whether the company has taken affirmative steps to attract, retain and promote women and to advance gender equity and women’s empowerment in the workplace and beyond. Pax seeks to invest in companies that promote gender equity through internal policies and programs, transparency regarding the effectiveness of those policies and programs, and accountability among employees to assure implementation and observance of the same. Examples include:
• Promotion of women to top executive positions and compensating them equitably
• Representation of women on the board of directors and in senior management
• Strong support from senior executives for workplace equality
• Career development and training programs for women employees
• Close monitoring of hiring and promotion activity to assure gender equity
• Programs to address work/life balance concerns, including in particular women’s health, safety and childcare responsibilities
• Programs to address discrimination against women and to protect women from harassment and violence
• Use of women-owned companies as vendors and service providers
• Positive images of women in their advertising, promotion and marketing
• Accountability and transparency to employees, investors and the communities in which they operate
Pax favors companies that have at least one woman in a key leadership role, either on the Board of Directors or in senior management. The Pax World Women’s Equity Fund generally avoids investing in US companies, or companies based in countries that we believe have board gender diversity similar to the US, that lack women in these key positions. Pax will generally avoid investing in companies that we believe are involved in the exploitation and trafficking of women, whose products demean women or that use negative stereotypes in their advertising, promotion or marketing. Similarly, Pax tries to avoid investing in companies that fail to provide a safe work environment for women by encouraging or tolerating harassment, as well as companies that have a history or pattern of discrimination or mistreatment of women.
Pax World also addresses the issue of gender diversity through its proxy voting. When voting on director elections, Pax World generally withholds votes from, or votes against where possible, slates of director nominees when there are no women on a company’s board of directors. Pax World generally registers these concerns with the company through a follow-up letter to explain the reasoning for the vote and to encourage the company to take steps to incorporate gender diversity into their board of directors.
Past performance does not guarantee future results.
The issues highlighted above are illustrative and do not necessarily reflect the full range of gender empowerment issues Pax World may consider in analyzing a particular security for investment.
1Catalyst, “The Bottom Line: Corporate Performance and Women’s Representation on Boards,” 2007.
2See, for example, David A. Carter, Frank D’Souza, Betty J Simkins and W. Gary Simpson, “The Diversity of Corporate Board Committees and Firm Financial Performance,” Department of Finance, Oklahoma State University, March 15, 2007; and Niclas L. Erhardt, James D. Werbel and Charles B. Shrader, “Board of Director Diversity and Firm Financial Performance,” Corporate Governance (11:2), April 2003.
3Fredrik Heyman, Helena Svaleryd and Jonas Vlachos, “Competition, Takeovers and Gender Discrimination,” Centre for Economic Policy Research Discussion Paper Series No. 6879, June 2008.
The Pax World Funds’ sustainable investing policies may inhibit the Funds’ ability to participate in certain attractive investment opportunities that otherwise would be consistent with its investment objectives and other principal investment strategies.