Investors want European banks to go further on board diversity

LONDON (BLOOMBERG) – The boardrooms of European financial services companies are failing to meet investor expectations in terms of their gender balance and the technology and sustainability expertise they possess.

Some 44 per cent of investors said gender diversity played a part in their decision to buy a company’s shares, according to the poll of 300 money managers by professional services firm EY.

About half said sustainability experience was important and 54 per cent said boards should have fintech experience. But the importance shareholders place on such attributes doesn’t match current board composition, according to Omar Ali, financial services managing partner at EY for Europe, Middle East, India and Africa.

While accountancy, finance and legal expertise is well represented on the boards of the listed firms analysed, just a third of bank boards have individuals with sustainability backgrounds.

That falls to 11 per cent for wealth and asset managers and just 4 per cent of insurers. Only 9 per cent of firms have any board experience in fintech and men hold 63 per cent of board positions at the firms analyzed by EY in its European Financial Services Boardroom Monitor, a new tracker of boardroom composition.

Stephanie Maier, global head of sustainable and impact investment at GAM, said the gender balance on a board plays a role in the asset manager’s decisions. “We will generally not support the appointment of the nomination committee chairman when there are no women on the board,” Maier said.

“We have seen some progress but not at the pace set out by regulators. As there continues to be regulatory and investor focus on board composition, we would expect this to pick up.” Investors would also prefer companies to appoint younger directors.

Only 8 per cent of the companies being assessed had any board members under the age of 40.