Norway Wealth Fund Asks Boards to Set Gender Diversity Goals

Norway’s sovereign wealth fund wants the companies in which it invests to start living up to explicit gender diversity goals.

The world’s biggest wealth fund, which oversees about $1.3 trillion from its head office in Oslo, said boards on which women make up less than 30% of the total should consider setting targets for gender diversity, according to a position paper published on Monday. The idea is to try to end the “persistent underrepresentation” of women on corporate boards.

Chief Executive Nicolai Tangen has made clear he intends to use his position at the helm of the giant investor to make companies more responsible in a number of key areas, including the environment and their roles in society.

The fund, which was set up in the 1990s to invest Norway’s oil and gas revenues abroad, owns about 1.5% of global stocks, spread across about 9,000 companies.

Having fewer women “may indicate that a board is recruiting too narrowly and does not have a clear view of the full range of backgrounds and competences required to be effective,” it said, adding it will require progress reports from companies.

The G20/OECD Principles of Corporate Governance specifically refer to improving gender diversity on boards as a relevant measure, the fund said. On average, 26% of board members are female in the G7 countries, it said, while in Europe, regulatory requirements vary between 30-40%.

“While there are many different dimensions to diversity, we are particularly concerned by persistent underrepresentation of women on boards,” the investor said. “Based on our experience from markets with mandatory gender quotas for company boards, we do not believe that gender diversity will crowd out other qualifications.”

Among the counterarguments, the fund noted that a link between diversity and company performance has not been established “by rigorous academic research,” while board diversity has already improved. Still, it said it considers board diversity “a contribution to the overall effectiveness of the board and an indication of an effective board nomination process,” which will ultimately improve board decision-making.

The fund said the gender diversity requirement also applies to men.

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