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Special Report

How Gender Diverse is my Stock?

It can be hard to measure board diversity at companies, so we've done the legwork for you. Use our interactive table to see the progress that companies are (and are not) making

Sunniva Kolostyak 9 March, 2022 | 11:20AM
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Investing to support female-led businesses is becoming increasingly important to many investors, but it is easier said than done. In the UK, about one third of all listed companies have no women at the top, while even fewer have an equal split – so identifying the companies that align with your values can be difficult.

Morningstar’s data has previously revealed that only one in 10 companies have more than 40% women at board and executive levels, so how do you go about identifying the right companies for you?

As we wrote on Monday, one way is to use our Morningstar Gender Diversity indices. They focus on the share of companies committed to equal opportunity and access, incorporating 19 gender-related criteria while also reflecting the broad equity market.

But what if you want to explore diversity on a stock-specific level? Fear not. We have created a search tool that gives you the opportunity to explore the gender diversity of all stocks on the London Stock Exchange, and view the three-year annualised return (for the companies that have been listed for over three years).

The table is based on our recent efforts to measure gender diversity and help investors evaluate officers and boards of directors of public companies. A caveat, though: it provides a binary view of male and female executives (presidents, chief executive officers, chief financial officers, chief operating officers, and chief accounting officers) and directors (board members).

The LSE stocks with the highest percentage of female leaders are Moneysupermarket.com (MONY), Ascential (ASCL), WAG Payment Solutions (WPS), Land Securities Group (LAND) and Auto Trader Group (AUTO). At least three out of five leaders at these companies are female. Returns, however, vary from negative to positive 10%.

At the other end of the table, however, there are quite a few companies. 416 stocks on the LSE have no women in their management – that’s 30% of the entire exchange. A further 315 companies, or 23% of the LSE, have up to 20% female managements. Together, this makes over half of all listed stocks.

So how can you best use the tool? Checking a company’s gender diversity is of course not the only aspect you should consider when investing, as it doesn’t necessarily mean that the company has good governance – but it is usually a good start. And, knowing some information about a company’s diversity can provide a better picture of what type of company you are investing in.

If we look again at the gender diversity index and its scoring method, National Grid, the British utility, is one of the best scoring companies globally on gender equality. According to Equileap, a specialist researcher and Morningstar partner, it is one of just 19 companies globally that have no gender pay gap.

On the representation side, National Grid has achieved gender balance within its board and its executive ranks. The company has strong gender-related policies, pays living wages, and offers generous parental leave. Our search tool also reveals a 50% male/female split and an annualised return of 12.75% over the past three years.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Sunniva Kolostyak

Sunniva Kolostyak  is data journalist for Morningstar.co.uk

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