One year from now will be the hundred-year anniversary of the House of Representatives passing the federal woman suffrage amendment. Today we are just two years shy of the centennial of the 19th Amendment to the Constitution giving women the right to vote. There are days when one really wonders if today’s House of Representatives would pass that amendment, if it came up. Maybe that’s one reason a record number of women have chosen to run for Congress in this year’s election.Women are concluding, after centuries of slow progress in gaining equal rights, that one way to get there is to be the leaders, rather than just lobbying them. Leadership matters, in public policy, in corporate management, in civic and community life—everywhere. Leaders set the agenda, and there is plenty of evidence that when women occupy leadership positions, it’s easier to make progress on women’s equality. That is good for everyone.
“Bringing more women into leadership positions is probably our best shot at closing the pay gap, ending workplace cultures that foster or tolerate sexual harassment, providing universal family-friendly benefits, and achieving truly equal opportunity for women.”
When Norway’s national parliament became the first one in the world to pass a law in 2006 mandating that 40% of board seats would be held by women, nearly 38% of its legislators were women. The U.S. Congress, in contrast, had only 16.3% women in 2006, and is still less than 20% female. There are only five women among the 24 people in the Cabinet or with Cabinet-level office. There’s a longer litany of dispiriting news, but it’s important to remember that outside of Washington, DC and outside of any government, progress is being made. Specifically, the private sector can help move the needle.
The needle isn’t in a wonderful place at the moment, but in the private sector at least, there’s no reason to think that it is stuck, as it seems to be in the federal government. Globally, about one-third of businesses have no women in senior management roles, and women hold about one-fourth of senior roles in business worldwide. There are gaps in every country between the share of women in the workforce and the share of women in management positions—though in at least one case (Costa Rica) women are better represented in management than in the workforce.
Progress in board gender diversity is also slow. According to MSCI, women held 17.3% of director positions among companies in the MSCI All Country World Index in 2017, up from 15.8% in 2016. It was somewhat better in developed countries—women held 20.4% of directorships among companies in the MSCI World Index—but the rate of progress was slower, up only 1.3% since 2016.
Female share of management employment and female share of labor force, all ages, 2015 or latest available year
Source: OECD, “The Pursuit of Gender Equality: An Uphill Battle,” 2017, p. 145. http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/the-pursuit-of-gender-equality_9789264281318-en#.WnTR0WhKuUk#page4
The good news is that something can be done and it doesn’t depend on the government. There is something everyone with a pension fund, 401(k) or investments can do to make an impact: invest in companies that invest in women’s leadership. There are now several funds available for investors that use gender criteria to put together an investment fund, including the Pax Ellevate Global Women’s Leadership Fund.
Having women in leadership tends to be good for everyone, including investors, and including men. Financially, companies with more women in leadership positions tend to have better financial performance than peers with heavier tilts to men. Credit Suisse reported that the companies in the Gender 3000 have “higher returns on equity, while running more conservative balance sheets.” And it can also be better for attracting and retaining more female talent: women need role models, and if they don’t see any in the management positions they aspire to, guess what happens.
There is also evidence that having more women in leadership positions helps other women in the workforce—and not coincidentally, men. A recent article noted that companies that employed the women in Fortune’s Most Powerful Women list tend to have better family friendly benefits than the average worker. A 2016 study from the Peterson Institute noted that companies with more women in corporate leadership positions tended to have better paternity leave benefits. Maternity leave wasn’t so correlated with women in leadership, likely because all developed countries with the notable exception of the United States already require paid maternity leave. But paternity leave isn’t so universally mandated. Finally, a very recent study of career advancement and the gender wage gap in the federal government showed that in offices with all female supervisors, the pay gap that disadvantages women disappeared.
Investing in a women’s leadership fund is one way to press for change. Another is to do what these funds do, even if you don’t invest in them: vote against all-male boards, or boards with only token gender diversity. At Pax, we’ve been doing that for well over a decade. Every year, we vote against fewer all-male boards, but in this day and age, there are still too many of them.
There’s no reason to despair about the lack of progress at the federal policy level. If you want to press for change, there are things you can do. Vote—both at the ballot box and on proxies. Invest. We are moving the needle, and we can keep doing that no matter who lives in the White House.
The statements and opinions expressed are those of the authors of this report. All information is historical and not indicative of future results and subject to change. This information is not a recommendation to buy or sell any security.