Norway's sovereign wealth fund wants more females on company boards worldwide, highlighting European progress and the fact that US firm Victoria's Secret has had none until recently when it appointed a female Chair. (Peter Dazeley/Getty Images)


Female company leaders: World’s biggest wealth-fund praises Europe but targets third world


Norway’s $1.6 trillion sovereign wealth fund, the world’s largest, will call on emerging-market companies in which it invests to appoint more women to their boards, top officials said, making the policy global for the first time.

One of the world’s largest investors, the fund holds stakes in around 8,800 companies globally, owning about 1.5 per cent of all listed stocks. It has set the pace on a range of issues in the environmental, social and governance (ESG) field.

Since 2021, the fund has seen “great improvements” on gender diversity on boards, its chief governance and compliance officer, Carine Smith Ihenacho, said, highlighting Europe, where a combination of State regulation and best-practice guidelines has boosted female director numbers.

The fund has been “pleased” to see progress on gender diversity within pan-European bourse Euronext, it said, and at Hollywood studio Warner Bros Discovery WBD.O and pan-European bourse Euronext, it said.

Both had one female director each in 2022, leading the fund to vote against the companies. They now each have three female directors.

Yet, Ihenacho said: “We have been thinking for a long time that we also need to vote in countries where this is actually more of an issue.

“In some developed markets and emerging markets, that is where we are really seeing women lagging behind.”

In practice, this means that if a company in emerging markets does not include at least one director of each gender, the fund will vote against the election of the chair of the nomination committee – or the chair of the board if there is no nomination committee – at an annual general meeting.

Post-2021, the fund has pushed companies to boost the number of women on their boards and to consider targets if fewer than 30 per cent of directors are female, focusing first on Europe and the US, then expanding the policy to Japan last year.

The policy will now be applied to companies in emerging markets, including from nations such as India, South Africa, Brazil and Egypt, the fund said in its updated voting guidelines on March 6.

That would mean companies such as Qatari telecoms firm Ooredoo , Indonesian industrial company ESSA and Brazilian logistics firm Hidrovias do Brasil, which currently have no female directors, could be affected.

The fund’s push may be a challenge in countries where the pool of candidates is smaller than in the developed world and comes amid some signs of a public backlash in the US against the drive to bring diversity to the top of organisations.

In developed markets, the fund will continue to vote against if the board does not include at least two directors of each gender.

The new voting guidance is expected to affect some 5 per cent of companies in the fund’s equity portfolio, said Amy Wilson, the fund’s head of stewardship.

“Our voting policy is there to address laggards and bring up the lowest performers, to close the gap up with our expectations,” she said.

Overall, around 60 per cent of companies in the fund’s portfolio are still below the expectation of at least 30 per cent representation of each gender on boards, she said.

The fund also toughened its policy for South Korea, Singapore and Poland, which had been exempt from the gender requirement even though the Norwegian investor had already classified the three nations as developed economies.

Those nations, along with Japan, will be required to have at least one member of each gender on the board, reflecting slower progress overall on gender diversity on boards, a “less mature pipelines of senior women”, and “smaller pools of female directors”, Wilson said.

So far, the fund has not divested from a company because it did not respect its gender diversity requirement and nor is it planning to, Ihenacho said.

“I think on this issue it is much better to be a vocal investor,” she said.

The fund’s policy has had some unexpected outcomes. In one case, the fund had to vote, two years in a row, against the chair of the nomination committee of a company that did not have a single man on its board.

The firm? US-based lingerie company Victoria’s Secret.