FOR IMMEDIATE RELEASE
March 31, 2015Cowell, Institutional Investors Call on Securities and Exchange Commission to Strengthen Corporate Board Diversity Disclosure
WASHINGTON, D.C. – Nine large public pension funds called today on the Securities and Exchange Commission (SEC) to strengthen the disclosure of corporate board diversity. In a joint letter, the funds urged the SEC to adopt a rule requiring corporate disclosure of board nominees’ gender, racial, and ethnic diversity, as well as their mix of skills, experiences, and attributes. The nine funds collectively supervise the investment of over $1.12 trillion in assets.
The proposal emphasizes the potential financial risk for corporations when their governing boards lack diversity, which could lead to “groupthink,” or lack of differing views resulting from a homogenous group. Their letter cites a 2011 International Monetary Fund report stating a ‘high degree of groupthink’ contributed to the IMF’s failure to correctly identify the risks leading up to the worldwide financial crisis.
“As large institutional investors, we have a real interest in electing a slate of board nominees who are well-positioned to help carry out a company’s business strategy and meet our long-term investment needs,” the funds wrote the SEC. “We believe better disclosure about the board’s skills, experiences, gender, race, and ethnic diversity can help us as investors determine whether the board has the appropriate mix to manage risk and maximize value.”
The letter also highlights the limitations of the current disclosure requirements as well as pointing out more robust disclosure standards in foreign jurisdictions.
Signing the letter were William Atwood, Executive Director of the Illinois State Board of Investment; Karen Carraher, Executive Director of the Ohio Public Employees Retirement System; Janet Cowell, Treasurer of North Carolina (North Carolina Retirement Systems); Thomas P. DiNapoli, New York State Comptroller (New York State Common Retirement Fund); Denise Nappier, Treasurer of Connecticut (Connecticut Retirement Plans and Trust Fund); Scott M. Stringer, Comptroller of New York City; Anne Sheehan, Director of Corporate Governance for the California State Teachers’ Retirement System; Anne Simpson, Director of Global Governance for the California Public Employees’ Retirement System; and Theresa Whitmarsh, Executive Director of the Washington State Investment Board.
“As Treasurer and a long-term shareholder, we believe that better disclosure about the diversity of boards – which can take on many forms - will lead to better investment decisions,” said North Carolina Treasurer Janet Cowell.Read the full letter here