HSBC-全球投资策略-多样性挑战：在董事会中超越性别-2021.12.pdf

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1、Disclosures&Disclaimer:This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it.Asset/SubcategoryDecember 2021ESG|GlobalDiversity ChallengesPlay video withYaryna Kobel and Camila SarmientoDecember 2021By:Yar

2、yna Kobel,Camila Sarmiento,the ESG team and the Data Science teamDiversity ChallengesLooking beyond gender in the boardroomMany markets have set gender diversity disclosure and quota requirements forboards:we look at trends across 24marketsBeyond gender,differences in reasoning and problem solving c

3、an benefit boards:broader cognitive diversity is keyWe highlight what contributes to cognitive diversity,the challenges diverse boards can bring,and 14questions to askESGGlobal 1 ESG Global December 2021 Board diversity snapshot Source:PwC,LBSLI,FRC,HSBC 1How does the composition of the board reflec

4、t the companys diversity of customers and other stakeholder groups?7How does the chair promote inclusive culture in the boardroom?2Has the board committed to any diversity targets?If so,how are they reporting on this?6How does the board manage any diversity related interpersonal conflicts or tension

5、s in decision-making?3What does the board believe are important diversity considerations,which contribute to its cognitive diversity,and how are these reflected in current board diversity policy?4How is the progress against this policy assessed?5What specific activities does the diversity policy inc

6、lude to embrace differences in the boardroom?14How is the board remuneration aligned with its diversity policy ensuring that any pay gaps are addressed?8How deeply did past board effectiveness reviews explore whether board dynamics support a shift in diversity?13What diversity and inclusion metrics

7、have been used for annual bonuses and long-term incentive plans?9How diverse is the search firm used by the board for its appointments?12How does the board build a pipeline of diverse talent within the company?11What forms of diversity does the board/nomination committee consider in its succession p

8、lanning?10How diverse is the nomination committee/committee which deals with the appointments to the board?What questions should investors ask?4Out of 24 markets mention diversity of thought in the boardroom28%Of UK directors come from a low socioeconomic background,against 48%of the population53%Of

9、 US directors say their board succession plan outlines diversity and skillsChallenges of a diverse boardWe think that highly diverse boards can embrace their high-performing potential when the following two challenges are actively managed:Key facts and figuresNegative effects of diversity in the boa

10、rdroom(FTSE350 board members,2021)Questions on keydiversity considerations(1-2)Questions on broadercognitive diversity(3-4)Questions on key challengesand board practices(5-14)Interpersonal conflictsdue to increased diversityAbsence of inclusiveculture in the boardroom Represent their own groupPre-co

11、ncieved perspectivesBias,tension or complexityNo negative effects8%11%25%39%ESG Global December 2021 2 Executive summary Many markets have set gender diversity disclosure and quota requirements for boards:we look at trends across 24 markets Beyond gender,differences in reasoning and problem solving

12、can benefit boards:broader cognitive diversity is key We highlight what contributes to cognitive diversity,the challenges diverse boards can bring,and 14 questions to ask Why diversity matters.Board diversity can reduce the risk of groupthink,optimise board decision-making and improve company perfor

13、mance.It can also help address inequality concerns,which have increased significantly during the pandemic.Regulators,investors and companies have intensified their diversity efforts in recent years,recognising the value it can bring.Gender diversity in the spotlight.Diversity efforts have been large

14、ly focused on gender,and more recently on ethnicity and race.These dimensions of diversity are the ones most easily measurable and in many markets required to be reported.While they provide a useful basis for looking at some aspects of board diversity,it is important to be aware of the multitude of

15、ways diversity can manifest in the boardroom.Cognitive diversity,or a diversity of thought,is important.We think to improve company performance,boards need to have cognitive diversity differences in interpreting information,reasoning and problem solving.A cognitively diverse board will be more effec

16、tive in challenging executives and bringing different perspectives to the boardroom.However,cognitive diversity has not been discussed on earning calls in the past year.In our view,investors should consider whether boards are thoughtful about what diversity forms may contribute most to their cogniti

17、ve diversity.These may include age,personality,sexual orientation(identity diversity)as well as socioeconomic backgrounds,culture,nationality,skills and experiences(experiential diversity).Addressing the challenges of diverse boards.We believe diversity can play an instrumental role in corporate per

18、formance,however,if managed poorly,has the potential for decreased performance.We explore two challenges diverse boards may face:(1)managing unintended interpersonal conflicts,and(2)embedding an inclusive culture to help with an unconscious bias and free expression of dissenting views.Board practice

19、s are key enablers of diversity and can include the use of diverse search firms,diversity of the nomination committees,diverse candidate pools and effective succession planning.Regional difference in diversity is evident.We compare international frameworks for board diversity in 24 markets.We find t

20、hat in many DM countries,gender diversity considerations are ongoing,whereas in many EM countries discussions on gender have just started.There has been little acknowledgement of the importance of broader cognitive diversity in the boardroom by countries,and few mention diversity of thought.3 ESG Gl

21、obal December 2021 Executive summary 2 The board diversity story so far 4 Equality and fairness considerations 4 Key stakeholder considerations 5 Groupthink in decision-making 5 The business case for diversity 6 What does it mean for investors?7 The different aspects of broader cognitive diversity 8

22、 Cognitively diverse board 8 Gender diversity 8 Racial and ethnic diversity 10 Personality and neurodiversity 12 LGBTQ+12 Age diversity 14 Socioeconomic diversity 16 Functional diversity 17 Other diversity aspects 18 Key investor considerations 18 Key challenges and board practices 19 Challenges of

23、a diverse board 19 The role of the nomination committee 20 Next steps for investors 23 Diversity frameworks and practices of different markets 25 International recommendations 25 Americas 25 Asia-Pacific 30 Europe 33 Middle East,Turkey and Africa 40 Our view 43 Conclusion 43 Disclosure appendix 46 D

24、isclaimer 48 Contents We acknowledge the contribution of Sanchit Sethi,ESG analyst,Bangalore,in the preparation of this report.ESG Global December 2021 4 Equality and fairness considerations The argument for diverse boards focuses on representation of the greater society and communities in which the

25、 company operates,as this improves equality and reflects fairness of opportunity.Gender equality,for example,is one of the 17 Sustainable Development Goals agreed to by UN member States.Women make up 40%of the labour force,1 however they are underrepresented in power and decision-making roles as the

26、y lack equal opportunity to compete for business prospects.2 Society is also diverse in terms of race,ethnicity,age and other characteristics.Diversity can correct biases and contribute to acceptance of a companys business practices by the greater stakeholder environment.The increased calls for fair

27、ness and social justice have echoed in board diversity discussions during the pandemic.We analysed the frequency at which key board diversity terms have been discussed by companies on earnings calls.We used a recent subset of our database of over 75,000 earnings transcripts as textual data to identi

28、fy sentences related to board diversity and track the regularity of sentences in which these themes were discussed,comparing them over time(see Alternative Data,13 September 2018,for an introduction to our natural language processing tools,and Listen Up,8 June 2021,for a recent report on its applica

29、tion).As figure 1 suggests,diversity considerations have been raised more often on earnings calls in the US and UK.We think this is linked to gender equality and wider discussions on racial diversity following Black Lives Matter protests,which picked up on US earnings calls in Q2 2020(for more infor

30、mation,see Racial Diversity,10 June 2021).At the same time,diversity in Latin America and other markets has also gone up on the agenda over the last two years._ 1 World Economic Forum,Global Gender Gap Report 2020 2 Gender Equality,UN Global Compact The board diversity story so far Regulators and di

31、fferent organisations agree that diversity can bring fair representation of society and improved corporate performance Most of the diversity considerations and efforts,however,have been focused on gender and,more recently,ethnic diversity We look at diversity arguments,thinking and research and high

32、light that discussion needs to continue in the context of cognitive diversity The moral case for diversity Board diversity discussions on the rise on earnings calls 5 ESG Global December 2021 Figure 1.Frequency of diversity discussions on earnings calls over time Source:HSBC,Refinitiv TRKD Key stake

33、holder considerations A focus on diversity also represents an opportunity for boards to broaden their understanding of key stakeholder needs and reflect their considerations in their decision-making.Research focused on consumer needs and innovation shows that when teams have one or more members who

34、represent the gender,ethnicity,culture,generation or sexual orientation of the teams target end user,the entire team is at least 144%more likely to say that it understands that end user.This insight is critical to identifying and addressing new opportunities and risks in relation to the unmet market

35、 needs 3 144%The percentage by which diverse teams are more likely to understand the end user The visibility of diverse leaders may also contribute to managing a companys relationships with its key stakeholders,including employees.These relationships and their robust support are key to the reputatio

36、nal capital of a company.Groupthink in decision-making Diversity in the boardroom may have a positive effect on the quality of decision-making by reducing the risk of groupthink.4 _ 3 S Hewlet et al,Diversitys Positive Impact on Innovation and Outcomes,INSEAD,The Global Talent Competitiveness Index

37、2018 4 The Financial Reporting Council,Guidance on Board Effectiveness,2018 01020304050602015-Q42016-Q12016-Q22016-Q32016-Q42017-Q12017-Q22017-Q32017-Q42018-Q12018-Q22018-Q32018-Q42019-Q12019-Q22019-Q32019-Q42020-Q12020-Q22020-Q32020-Q42021-Q12021-Q2Frequency per 100,000 sentencesAsiaEMEALatAmEurope

38、 ex UKUKUSABetter understanding of key stakeholder needs Influence of diversity on a companys reputation ESG Global December 2021 6 Groupthink is a phenomenon that occurs when a group of well-intentioned people makes irrational or non-optimal decisions spurred by the urge to conform or the belief th

39、at dissent is impossible.”Psychology Today Magazine The term groupthink was first introduced in 1971 by psychologist Irving Janis.He explained that groupthink exists when concurrence seeking becomes so dominant in a cohesive ingroup that it tends to override realistic appraisal of alternative course

40、s of action.5 The pandemic has brought the risk of groupthink into the spotlight as psychologists believe that groupthink can occur in a highly stressful situation.This may include external threats,time pressures and constant deadlines coupled with a moral dilemma.6 During the pandemic many boardroo

41、ms faced new issues that needed to be addressed immediately and had the potential to impact health of their employees.A diverse boardroom,we think,is better able to raise different views to the discussion to find optimal solutions for unprecedented situations.The business case for diversity The busi

42、ness argument for improving diversity of the board,a so-called business case argument,is that increased diversity is instrumental to organisational performance.For example,McKinsey&Company have undertaken extensive research investigating the impact of gender,ethnic and cultural diversity on corporat

43、e financial performance.They found that companies in the top quartile for gender diversity in their executive teams were 25%more likely to experience above-peer-average profitability than companies in the fourth quartile.Also top quartile companies for ethnic diversity were 36%more likely to outperf

44、orm on EBIT margin.Academic research also provides evidence in relation to other benefits of gender,ethnic and age diversity of the board(or teams solving complex tasks).Potential effects mentioned by academics include:Greater corporate social responsibility7 Enhanced ESG standards,including greater

45、 stakeholder engagement,improved reputation and brand capability8 Higher innovation levels and more accurate predictions9 Greater decentralisation in how boards operate with committees having strong delegated powers10 Lower number and size of acquisitions the firm engages11._ 5 I Janis,Groupthink,Ps

46、ychology Today Magazine,1971 6 I Janis,Groupthink,Psychology Today Magazine,1971 7 K Byron and C Post,Women on boards of directors and corporate social performance:A metaanalysis.Corporate Governance:An International Review,24(4),2016 8 A Di Miceli and A Donaggio,Women in Business Leadership Boost E

47、SG Performance:Existing Body of Evidence Makes Compelling Case,Private Sector Opinion,42,IFC,2018 9 S Hewlet et al,Diversitys Positive Impact on Innovation and Outcomes,INSEAD,The Global Talent Competitiveness Index 2018;H Grant and D Rock,Why Diverse Teams Are Smarter,Harvard Business Review,2016 1

48、0 The Financial Reporting Council,Board Diversity and Effectiveness in FTSE 350 Companies,July 2021 11 G Chen et al,Female board representation and corporate acquisition intensity,Strategic Management Journal,37,2014 The risk of groupthink under conditions of stress Diversity has been widely thought

49、 to be instrumental to organisational performance Studies found linkage to different improvements in organisational practices 7 ESG Global December 2021 Improvements in financial performance,however,have not been seen consistently by scholars.Peer-reviewed meta studies have shown,for example,that gr

50、eater female representation on boards tends to bring better accounting returns,however,had no impact on market or financial performance.12 We caution investors over being absolute in the business case of diversity presented by many studies.It is difficult to report objective,aggregate data on anythi