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State Street Says Yes: Is Women’s Leadership on Corporate Boards Material to Investors?

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This year, International Women’s Day was also A Day Without Women for many businesses. Companies found out just how difficult it is to get through the day, much less make progress or profits, without their female employees.

This may be true for corporate boards of directors as well.

Perhaps the week's signal event was the announcement from State Street Global Advisors of a campaign to bring “the power of women in leadership to life – right here in the center of our financial markets.” The campaign will pressure companies to add more women to their boards.

The world's third-largest asset manager installed a beautiful statue by artist Kristen Visbal on Wall Street. The statue, rendering a young girl proudly and perhaps defiantly standing up to the imposing scale of the iconic charging bull, is no small statement. This unveiling was followed by State Street’s announcement of their commitment to update their proxy voting guidelines in favor of inclusion of women on corporate boards.

Ripple effects

Given that State Street manages $2.5 trillion in assets, this move has potentially huge ripple effects.

Currently, most boards of publicly traded firms are at least 85 percent male (women hold between 12-15 percent board seats). Almost a quarter of the companies listed on the Russell 3000 index have no women at all.

The fact that over 80 percent of companies listed on the S&P 500 have no women board members is not only appalling as far as our efforts to achieve gender equity, research suggests that it might also be material to financial outcomes. An MSCI study, for example, found that companies with strong female leadership had 36.4 percent higher returns on equity than those companies with less gender-diverse teams. Other research suggests that boards that include women are more likely to start their meetings on time and be more collaborative. More and more, the financial world is finding that while inclusion might be the right thing to do, the promotion of women is also the financially savvy thing to do.

Those of us creating gender-lens portfolios have understood the benefits of having women in leadership roles for some time. The fact that large firms like State Street are now coming “on board” stands to impact the very ways we about investing on a large scale.


Our securities laws require advisors to provide full disclosure concerning material facts when making recommendations or discussing with clients the pros and cons of investing (or divesting) from a company. The law defines material as any information used by a prospective purchaser to make an informed investment decision, and investors (of course) make decisions on the basis of the qualifications of a company’s management.

If, in fact, it is determined that a board containing no women is material to company performance and financial returns, advisors will then need to disclose that information to clients and customers. What if full disclosure, in addition to including industrial sector, type of business, product or service, etc. also evolved to include disclosing how many women are in top management? SASB (the Sustainability Accounting Standards Board) is working diligently on getting information out to the public on just what is material to company performance.

Once the prevalence of women becomes an official topic for advisors to discuss and to disclose, we stand to make progress on many fronts. With these changes in place, it will be interesting (and exciting) to see just how quickly women begin to appear on in the C-suite and the boardroom.

Women are certainly making history this month. Cheers to all of those helping to make strides both for gender equality and for more balanced corporate leadership, and to State Street for using the power of art to make a bold and welcomed statement about the importance of women in leadership.

Photo credit: Business Wire

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