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FTSE 350 chairmen urged to declare their goals for female representation on their boards

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Seven institutional investors in UK listed companies have asked FTSE 350 chairmen to declare their aspirational goals for the representation of women on their boards in 2013 and 2015 by the end of this month.

In his report Women on Boards earlier this year, Lord Davies of Abersoch called on these Chairmen to disclose these goals by September. In a joint letter to each FTSE 350 Chairman who has not yet published a statement, the investors said that they were eager to understand plans and support progress on this important and topical issue.

Helena Morrissey, CEO of Newton Investment Management and one of those signing the letter, said: "In his recommendations, Lord Davies highlighted the critical role investors play in engaging with company boards.

There is a growing body of evidence that greater diversity at a board level can improve corporate financial performance thereby increasing returns to shareholders. Investors are keen to understand how chairmen are responding to this important issue."

Denise Wilson, non-executive director and member of the Davies steering group, said: "Today, around a third of FTSE100 Chairmen have made a public statement of their goals. We expect many more to do so by the end of September. This letter shows that there is strong investor interest in their response."

The UK Sustainable Investment and Finance convened the initiative Association.

Penny Shepherd, UKSIF chief executive, added: "Responsible investors are keen to hear company plans and support progress on benefiting from gender diversity at board level. In the light of the European Commission's recent

Corporate Governance Green Paper, Lord Davies' recommendations also offer a significant opportunity for UK companies to demonstrate the effectiveness of a 'comply or explain' approach compared with the use of gender quotas."

Women on Boards (February 2011) is the report of an independent review byLord Davies of Abersoch into gender diversity on the boards of UK listedcompanies. The review took place at the invitation of the UK Government.

 

The letter send to FTSE chairmen, reads:

We are writing as investors in UK listed companies about the recommendations of the Davies Report on "Women on Boards".

As you will know, Lord Davies recommended that all FTSE 350 Chairmen should set out by this month their aspirational goals for the percentage of women on their boards in 2013 and 2015. We trust that you have decided to respond and will set and report positive and forward-looking goals within the context of your company's particular circumstances.

In our view, greater gender diversity at board level can lead to more effective boards. It can contribute to a breadth of perspective among directors, result in more balanced judgment and opinion in decision making, and reduce any tendency towards 'group think'. There is also a growing body of empirical evidence that a more diverse board can improve corporate financial performance.

We look forward to understanding both your goals and your plans for responding to the other recommendations to companies in the Davies Report. We understand that

Chairmen of boards that already include a strong proportion of women directors are still asked to lay out their goals for maintaining or increasing their representation over time.

We attach a summary of the report's key proposals. We think that the recommendation that all Chief Executives review the proportion of women on their Executive Committees in 2013 and 2015 is also key.

In the light of the European Commission's recent Corporate Governance Green Paper, we consider that Lord Davies' recommendations offer a significant opportunity for UK companies to demonstrate the effectiveness of the voluntary "comply or explain" approach compared with the use of gender quotas.

As signatories to the UK Stewardship Code, we are committed to exercising and enabling responsible ownership on behalf of our clients. We are therefore keen to understand your plans and support your progress on this important and topical issue.

If you have not yet responded to this recommendation of the Davies Review, we do hope that you will do so by the end of the month.

We understand that Cranfield School of Management has recently requested a copy of your statement. We believe use of a Regulatory News Service (RNS) is an effective way to announce this information to the wider market and would encourage you to consider this as an additional measure.

We have aimed to send this letter only to Chairmen who have not yet laid out their goals.

Please accept our apologies if this letter has crossed with communications to us, to Cranfield or to the market. For your information, we have sent a similar letter to your Chief Executive.