12 minute read
board diversity
Mixing it up
There has been a stronger focus on board diversity in general over the past decade, but fund boards have been slower to evolve. So what are the benefits of driving diversity among these groups – and how can progress be speeded up?
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Words:
Alexa Robertson
ONLY MONTHS AFTER the Financial
Conduct Authority published measures to improve the diversity of company boards, the world of finance is continuing to step up efforts to broaden the thinking and experiences represented on fund boards.
However, while progress is being made, the difference in regulation between listed and unlisted funds has meant that some boards have taken longer to bring about change than others.
“When it comes to many fund boards, this is not as regulated an area as, for example, listed businesses,” says Mirek Gruna, Chief Commercial Officer, Jersey, at IQ-EQ. “In that sense, the public interest in board diversity is not as big a factor as it is for larger organisations.
“But, irrespective of that, the key principles of diversification apply in the same way, whether it is a founding board or the board of a FTSE 100 company.
“Diversity improves decision-making, strengthens corporate governance and effectively makes the fund or the company more resilient.”
WHAT’S IN A WORD?
The definition of a diverse board – and exactly what that encompasses – is evolving.
Brian Burkholder, Managing Director in Cayman of HF Fund Services, an Equiom company, has seen a dramatic shift in the way that diversity is being considered at board level today.
“Five years ago, the topic of board diversity in terms of gender, race and other factors was never discussed, but it’s starting to become a topic of focus,” he says. “At one time, when talking about diversity, we just focused on skill sets – do you have an accountant, do you have a lawyer – but now it’s extending beyond that.
“Diversity, to me, includes representatives of the community to reflect the nature of the investors in the fund, which is most likely a diverse group of people.”
Norma O’Sullivan, Managing Director of TMGA Wealth Management, warns that diversity can be thought of in too limited a way. “When people say diversity, particularly in the context of boards, there can be an assumption that what you’re talking about is female representation or ethnic minority representation. But there are other ways to look at diversity.
“There’s neurodiversity, for example, and age diversity, which can provide different generational perspectives, and socio-economic diversity.
“It’s not just about female and ethnic minority representation on boards – although that’s a good starting point. By being successful in that, you are more likely to increase the aspects of diversity on the board.”
A CLEARER VISION
So what are the benefits of driving diversity among fund boards? And – perhaps more pressing – what are the dangers of failing to view diversity as a priority?
“If you think about a board, it’s expected to have a balance of skills and experience, and be able to exercise sound judgement,” says O’Sullivan. “Those are fundamental concepts of corporate governance.
“To do that, a board needs to be fully aware of a broad range of issues that could be impacting the business, along with the requirements and expectations of its investors and wider stakeholders.
“There has to be diversity in order to increase awareness through greater clarity of thought. Increased clarity – through that breadth of thought and experience – allows more effective decisions to be made.”
While diversity is vital for strategic decision-making, it’s also increasingly important for investors, who are becoming more and more discerning about the ESG impact of new funds.
“If you have investors who are measuring ESG, especially the governance and the social aspect of ESG, and are ▼
looking at platforms to invest in, they will themselves be asking tough questions on that,” says Gruna.
Burkholder agrees, and says we are at a point where the values of failing to prioritise diversity are, in themselves, why this must be driven forward across the sector.
“Some asset managers will eventually start to have trouble attracting money to their funds if they don’t adopt and embrace this diversity factor,” he says. “It’s simply the right thing to do.
“I’ve been appointed to a board and it’s made up of three accountants – all middle-aged males – and you think: ‘Well, what is that going to do in terms of bringing a diversified skillset and diversified experiences to the board?’
“A board like that is not well positioned to handle all of the issues that come up over the lifespan of a fund. A lot of different things happen over the lifespan of a fund, and you want people who bring different experiences to each situation – and it won’t be three accountants or three people with experiences that are all the same.”
FROM THE GROUND UP
While diversity is improving at board level, there remain short-term – as well as longer-term – challenges to building truly diverse fund boards.
Monette Windsor, who is a Director at HF Fund Services and a former Co-Chair of the Cayman branch of campaigning The goal is that, by 2040, 30% of senior investment and executive committee member roles will be held by women.
“By looking ahead to 2040, what we’re really doing is targeting the next generation. It’s about outreach, it’s about reaching out to girls in high school and college, providing programmes to inspire them and showing them there is a clear pathway for them into careers in finance.
“It’s also about providing mentors for women either already in the industry or thinking about a career in the industry, no matter what stage they’re at, so women can help raise each other up.”
group 100 Women in Finance, believes that, although women are becoming better represented in the finance sector, achieving real diversity involves change at grassroots level.
“Of course it’s good to have diversity on fund boards, but if there are not women at that level in their career who can fill those positions, you just can’t fill those positions,” she says.
“At 100 Women in Finance, we have a global campaign called Vision 30/40.
MAKING INROADS
It’s clear that much remains to be done on diversity. But for Windsor, who is based in Cayman, the change in the finance landscape over the past 10 years is a source of great hope and optimism.
“Although the Cayman Islands has a big finance industry, it is a small island,” she says. “Ten years ago, when we founded 100 Women in Finance here, we needed to have 100 members signed up and we were scratching our heads trying to think of senior women in the industry at that time and whether we would be able to get enough signed up.
“But here we are 10 years later and we have more than 700 members, on an island of only 65,000 people, which is quite something. We’re definitely going in the right direction.” n
No more Monday blues
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What type of RPA solutions are available?
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WHERE TO START
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FIND OUT MORE
Email: businesslife@agileautomations.co.uk Tel: (+44) 0161 804 1399 or 0203 912 0882 Web: www.agileautomations.co.uk/contact
