Fearless Girl at the New York Stock Exchange. (Photo: State Street Global Advisors)

“Asset managers are paying increasing attention to board diversity and gender equity in the workplace as key investment metrics,” according to a new Morningstar report.

That’s not surprising given the growing evidence that having a female CEO and female board members, preferably together in the same company, as well as a diversified workplace improves corporate performance.

With that in mind, several fund companies have gone beyond incorporating those metrics via ESG analyses when selecting assets by creating funds with a gender focus. They include the SPDR State Street Global Advisors (SSGA) Gender Diversity Index ETF, which trades under the SHE symbol, the Glenmede Women in Leadership U.S. Equity Portfolio (GWILX) and Pax Ellevate Global Women’s Leadership Fund (PXWIX).

Morningstar studied the proxy voting history of all three, plus several Calvert Research and Management funds, and found that their support for gender-focused shareholder resolutions was anything but uniform.

While the Pax Ellevate, Glenmede and Calvert funds voted 100% in favor of the gender-focused shareholder proxies that came before them, State Street supported just 20% of such resolutions.

The firm that sponsored the Fearless Girl statue installed in New York’s financial district failed to support eight of the 10 gender and diversity shareholder resolutions it voted on over the past three years, including five pay-equity resolutions. It opposed six of the 10 gender and diversity resolutions and abstained from two.

(Related: Why Proxy Votes Are Important for ESG Investing)

The findings were similar to another analysis by Morningstar, which focused on funds’ proxy votes on climate-change shareholder resolutions: Funds from companies whose purpose is socially responsible investing favored a much larger percentage of those resolutions than funds from more traditional investment companies, such as State Street Global Advisors.

“Our preference continues to be constructive engagement, and we only take voting action as a last resort,” wrote SSGA CEO Cyrus Taraporevala in a recent blog post.

But Madison Sargis, co-author of the Morningstar report and director of the firm’s quantitative research, says, “Engaging with companies on these issues and voting are not mutually exclusive. Funds that want to make an impact should be using all the levers they can.” She adds that “SHE’s failure to support shareholder initiatives that contribute to workplace arrangements, which foster access to the highest corporate positions, seems shortsighted.”

State Street did report, however, that in the last two proxy seasons it voted against the nominating committees of more than 500 companies because they failed to add at least one female director.

Morningstar expects that gender diversity and gender pay equity issues will be in the spotlight in the current 2019 proxy season, along with resolutions that address climate change. Investors and advisors can then decide whether funds are acting in accordance with their professed ESG objectives.

SerenityShares Impact ETF, which had a mixed record on proxy votes since its launch in 2017,  supported 12 of 14 environmental and social shareholder resolutions but only one of 64 gender and diversity resolutions during the 2018 proxy season, and was liquidated on March 19, 2019, according to Morningstar.

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