Diversity improves sustainability performance

Diversity improves sustainability performance

May 14, 2018
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Image credit: bruce mars via pexels
Monday, May 14, 2018

Zeist, Netherlands – Netherlands based Triodos Investment Management has published its report on socially responsible investment (SRI), explaining how the company identifies the most sustainable companies, and contributes to further improving the sustainability performance of enterprises. One focus topic in 2017 was diversity.

The SRI Engagement Report shows that Triodos Investment Management assessed 49 new companies, of which 22 per cent were selected for possible investment in 2017. Overall the specialist in sustainable investments recommended 276 companies for possible investment in 2017.

One of the firm’s focus topics was on diversity which was heavily featured in the 2017 annual general meeting (AGM). Already in December 2016, Triodos Investment Management, which is a subsidiary of Triodos Bank, had sent a letter to 104 portfolio companies, announcing that for the AGMs in 2017 the fund would focus on diversity. They called upon them to publicly disclose their policies, programmes and targets for promoting diversity within the organisation, to develop targets for board diversity and to publicly disclose evaluations of this policy and the actual achievements.

17 companies responded, and only four of those set targets: Novo Nordisk, Canadian National Railway, Inditex, and Smith & Nephew. Diversity therefore remains on the company’s engagement agenda, as is a known driver for sustainable business.

Several studies indicate that companies with more diversity in executive and/or supervisory boards usually perform better financially. In addition, companies with more female board representation have a stronger environmental and social performance and less governance issues. Two positive examples are Swedish bank Svenska Handelsbanken which has a 50/50 gender balance on its supervisory board and Canadian National Railway which has implemented several programmes. It also reports well on progress and has been recognised as one of Canada’s ‘Best Diversity Employers’.

In general, diversity relates to aspects of gender, independence, age, sexual orientation, nationality, culture, ethnic background, expertise, professional qualifications, experience and education. Usually however, it is gender that is the key issue for companies.

Despite progress over recent years and increased recognition of the value of gender diversity, the issue remains a big problem for many companies in both their board composition and their workforces, write the Triodos expert. European regulators, however, have started to debate the importance of board diversity, stating reasons of social and corporate citizenship, and some countries have already implemented gender quotas.

Image credit: bruce mars via pexels