CalPERS, the largest and, arguably, most ESG-centric pension fund in the US, is taking a step back from the ‘30 per cent club’ rule. CalPERS, a US$340 billion bellwether fund for the world, thinks diversity is more than just about having more women on boards.
According to Asset International, publisher of ‘ACIO’ newsletter, notes from a recent board meeting at the Californian fund suggested that the State Treasurer, John Chiang, who is also a CalPERS director, had wanted to set a 30 per cent diversity rule. However, this would involve both gender diversity alongside an ethnic background diversity. Therein lies the rub. In board documents, CalPERS staff say engagement targets could be seen as “arbitrary and limiting.”
The CalPERS board also said that, depending upon a company’s location and markets, “race and ethnic diversity definitions will vary.”
CalPERS has been a leader worldwide in pushing for the diversity of the boards of companies it owns in its global equity portfolio but has never set specific diversity requirements.
In November, Chiang said he was “shocked” by “high profile and widespread instances of sexual harassment and misconduct” that has occurred. Chiang maintained that a solution to the problem was changing the power structure of corporations by having more diverse boards.
Chiang said one study, the 2016 Deloitte Board Diversity Census, found little diversity on corporate boards. He said woman represented among Fortune 500 companies only 20 per cent of board seats. He said the study found minorities did even worse. Chiang said only 8 per cent of board seats were held by African-Americans, 4 per cent by Hispanics, and 3 per cent by Asian-Americans. Chiang is a Democratic candidate for governor of California.