An increasing number of Black women are joining boards of directors at S&P 500 companies — a trend that could bode well for gender-lens investing. Among the reasons that gender-focused investing is gaining momentum is that more market participants want corporations to focus on the “S” and “G” in environmental, social, and governance (ESG). Gender equality is one way of accomplishing that goal, and exchange traded funds such as the IQ Engender Equality ETF (EQUL) take this into account.
To be clear, EQUL doesn’t focus on the gender composition of boards of publicly traded companies. Rather, the ETF’s underlying index places an emphasis on companies that “are committed to women’s empowerment through equal compensation and gender balance in leadership and the workforce,” according to the issuer.
Still, the theme of more women on corporate boards, including Black women, could underscore the viability of EQUL’s long-term investment thesis.
“As of April 30, 2022, 46 of the 395 new directors named since May 1, 2021, or 12%, were Black women, according to Spencer Stuart, the executive and board recruitment firm, up from 2% in 2008, when the firm began tracking race and ethnicity among board members,” reported the Wall Street Journal.
Whether it’s board of directors composition or equality in terms of compensation and prominence in high-level corporate roles, more institutional investors are paying attention to gender-related issues. Those include fund giants BlackRock, Fidelity, and State Street, among others, according to the Journal.
Another point that potentially augurs well for EQUL over the long term is why more companies are elevating women, regardless of race, to the C-suite and boards. It’s not always about diversity for its own sake. It’s about a variety of experience, new perspectives, and skill sets.
“Several Black women who are directors stress that they aren’t on boards primarily to help foster workplace diversity and inclusion. They are there to lend their expertise. Black women are bringing business acumen from a variety of professional backgrounds and industries, says James D. White, a former CEO of Jamba Inc., board chair of Honest Co. and an adviser to Black Women on Boards,” noted the Journal.
There are also sector considerations. Some sectors are proving more adept at emphasizing gender equality, including financial services, technology, and healthcare. Those groups combine for 45.3% of the EQUL roster. Energy is currently the lone sector not represented in the ETF.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.