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New Report From ISS ESG: Gender Diversity and Performance – The Links Are There, But… #itscomplicated

Below is an excerpt from ISS ESG’s recently released paper “Gender Diversity and Performance – The Links Are There, But… #itscomplicated” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.

KEY TAKEAWAYS

  • Linking EVA Margin (Profitability) and Quality (P-R) to a company’s level of gender diversity on the board can provide opportunities for additional alpha.
  • Avoiding companies with low Quality measures and a low ratio of women on the board can be a good risk management policy at the portfolio level.
  • Companies that have already achieved minimal – assessed as one third – female board representation also have a higher level of EVA Profitability and an overall higher Governance Quality Score (GQS).
  • While this analysis finds unambiguously that higher levels of female board representation are associated with stronger performance in terms of EVA Margin, the finding that levels just below 50% produce the best performance-related outcomes bears further research, as does the impact of sectoral influences on these results.

By Gavin Thomson, Integrated Portfolio Management, ISS ESG