07-03-2024 14:00

Can diversity impact climate change and the value of a company?

As a fund company and active owner Nordea is working for diversity in the companies we have invested in. Head of Corporate Governance, Katarina Hammar, shares insights on how we engaged with 75 companies to get more women in their Boards.
Katarina Hammar

By Katarina Hammar

The Board of a company should promote long-term value creation for the benefit of shareholders. A more diverse Board can often benefit the business but women are often in the minority. This is something Nordea as a fund company, managing investments on behalf of our customers, want to balance. 


In 2021, Nordea identified globally 75 companies Nordea had invested in where no women were represented in the Board of Directors. 

From investment perspective, the business case for diversity is strong as diverse companies have been more likely to overtime outperform their less diverse peers on profitability. For instance, according to a study by the consultant McKinsey including more than 1,000 companies in 15 countries, the likelihood of companies’ financial outperformance has correlated with the diversity of the top management. 

In addition, research seems to support the diversity case also from climate perspective as more  diverse boards have also been more likely to take into account both the climate change risks and opportunities in the business. An academic study covering nearly 2,500 companies from 63 countries found that companies with diverse boards pay closer attention to climate change, which results to them being less exposed to both the physical and indirect risks caused by it. Consequently, diversity is important for our customers investing in Nordea funds, and for us to be able to deliver as good as possible returns with responsibility.

We are fully aware that diversity is and should be about more than just gender.  At the same time we also see that we need to start somewhere and need to have a clear, concrete and realistic metrics and target we can push for.  At the moment of writing, we are still striving to achieve the one for the gender split in the Board of directors in invested companies to be at least 40/60. 


After first reaching out to the 75 companies in November 2021, we decided to contact them  again in December 2022 and stated  that we would vote against the Chair of the Board of Directors, or the Chair of the Nomination Committee, if we could not see any progress in of the share of women on the company Board.  Several companies responded us quickly and we had many meetings to discuss the topic. 


Only 18 months after our first contact, in May 2023, more than half, 52% of the companies addressed, had elected at least one woman on their Board of the Directors. For instance Japanese Toray Industries and Sumitomo Realty & Development and Indonesian PT Media Nusantara Citra have already  introduced more women to their Board of directors.

For the remaining 48 %, namely the companies that could not present a plan of intended changes, Nordea has agreed to vote against the Chair of the Board or the Chair of the Nomination Committee. 

Both I and the Head of Active Ownership team, Cecilia Fryklöf have been delighted to notice that actual progress was  made in more than half of the companies that we addressed. 

Of course there still is work to be done both from gender and from wider diversity perspective, and we will continue the work through company engagement, voting and participation in nomination committees. 

We are convinced that by being an active owner, we can continue to have an impact and effect companies that we invest in and thereby secure long-term value creation for our clients. 


Read also the story in DanishFinnishSwedish or Norwegian in the Funds Magazine. 


Diversity & inclusion
Active ownership