When people began discriminating against other people, we stopped being able to take advantage of all the talent available to us. In a world confronting the global challenges of systemic racism and inequality, not to mention climate change, resource scarcity and biodiversity loss, we’re going to need all that talent. The time has come to end tribalism and embrace the era of talent.

This will be valuable for civil society and economics, but also in financial performance. Finance has come a long way since the first academic writers started exploring the impact of gender diversity on boardrooms. Two-plus decades ago, combining the words “board” and “diversity” made a lot of Wall Streeters change the channel; diversity simply wasn’t regarded as relevant in finance. A common question that reporters asked investors interested in diversity on corporate boards back then was along the lines of “prove to me that women can be as good at corporate strategy as men.” We’ve moved far beyond that now, with some of the biggest investment powerhouses in the world publicly stating their disapproval of all-male boards. Miles traveled indeed — but there are still miles to go.

Gender diversity has improved on corporate boards, mostly among larger companies, and sometimes because of regulatory mandates or hortatory requirements such as comply-or-explain. Racial and ethnic diversity on corporate boards, however, are still far behind. The same is true in every measure of diversity used in finance: pay equity, management diversity, workforce demographics, hiring and other workplace management decisions. Equality of opportunity — and thus, making use of all the talent available — is still a long journey, no country has completed it.

The good news is that we know far more about diversity and its impact on economics and finance than we used to know. In the 1990s and early 2000s, most diversity literature in English focused on one thing: gender diversity on the board. The diversity knowledge smorgasbord is much richer now: We still have interesting new things to read about board diversity every year, but we also have more insight into how diversity contributes to economic and financial success through innovation, human resource management, governance and monitoring, and product offerings.

During the last two-plus years, much useful knowledge has been added to the financial syllabus, and investors who are on top of that reading list are probably better equipped to find good ideas for their portfolio than less well-read peers. Here’s what’s happening.

Board and Executive Diversity

A decade or two ago, much of the literature that looked at the relationship between financial performance and diversity focused solely on women, and it reported correlations without much speculation as to why the correlations were or were not present. The typical study 15 years ago looked at correlations between board gender diversity and some measure of financial performance, be it return on assets (ROA), return on equity (ROE), Tobin’s Q, or stock price. Newer papers do similar work: For instance, a 2020 study found that gender diversity among S&P 500 boards between 2004 and 2015 was correlated with financial profitability, measured by ROA.1 Bloomberg reported in 2021 that board gender diversity was positively associated with better ROE for companies in the Russell 1000 index, reporting that the companies in the top quintile of female representation on boards had median ROE of 13.5% versus 12.5% for the lowest quintile.2 Another recent study from Australia found a strong and causal relationship between representation of women on boards, the CEO position, and among senior executives and higher firm market value.3 In fact, greater female presence on the board and in key management positions led to a higher likelihood of firms outperforming peers on several metrics, including ROE, Tobin’s Q, Earnings Before Interest and Taxes (EBIT), sales per employee and dividend yield.

Why diversity outperforms

There is considerably more writing about the impact of diversity among senior decisionmakers now — executives as well as board members — and many of these studies also explore the underlying reasons behind the relationship between diversity and financial or economic results. One of the most interesting reads of the recent past came from S&P Global,4 which described the significant underrepresentation of women among the ranks of corporate CEOs and CFOs and also noted that women promoted to the C-suite “have attributes consistent with the most successful male executives.” Female CEOs’ firms had higher value appreciation and improved stock price momentum, and female CFOs also drove higher value appreciation, defended higher profitability better, and delivered excess risk-adjusted returns among firms in the Russell 3000. The report also delivered a key insight: Women are held to a higher standard than men within the C‑suite. Achievements, education and personal traits associated with success were more prevalent among female appointees to these roles, meaning that male candidates are often selected while more qualified women are passed over. It’s not news that the glass ceiling exists, of course, but it is interesting to consider that if we ever do overcome the male bias in promotions, we may end up with more talented executives. Firms with a higher proportion of women on their boards were also more likely to appoint women to the CEO and CFO roles.

Culture

Other new literature explores the connection between how women’s behavior affects corporate outcomes. One study focused on bank board diversity and found that higher proportions of women on boards was causally and significantly related to lower fines for misconduct, and that represented a cumulative savings of $7.48 million.5 The authors suggest that a more gender-balanced board helps foster a better corporate culture that reduces the risk of poor conduct.

That theme is echoed by a paper examining corporate culture specifically related to sexism.6 A sexist corporate culture often is hidden from public view until a scandal happens, and that can corrode financial value significantly.7 While it is difficult to discern a sexist corporate culture from the outside, one way to identify a lower likelihood of having such a culture is by looking at the gender makeup of the executives. A 2019 study proxied non-sexist cultures by looking at the presence of women among the five highest paid executives; it found that during the #MeToo era, those firms earned excess returns of 1.6%. The gap between these firms and their peers was even higher in industries with few women executives and was higher in states with more sexist laws and policies and higher gender pay gaps.6

“The authors suggest that a more gender-balanced board helps foster a better corporate culture that reduces the risk of poor conduct.”

Another new paper took a more direct approach, examining what happened to firms whose CEOs engaged in sexual misconduct. When the conduct was uncovered, firms lost on average $2.23 billion.8 Interestingly, firms where the CEO engaged in sexual misconduct were actually more likely to have lower profitability already, a finding that may reflect on the quality of management, even in the absence of publicly available evidence of misconduct.

Employee morale and productivity can also take a hit when companies permit a culture of workplace harassment to exist. An interesting analysis of employee online reviews showed that in companies where employees see a culture of sexual harassment, there were sharp declines in operating profitability and labor costs. Those were manifest in risk‑adjusted returns: Firms in the top quintile of scores for sexual harassment (higher scores mean a culture more conducive to sexual harassment) earned lower risk-adjusted returns, equating to an annual loss of shareholder value from $800 billion to $1.4 trillion.9

Another new piece of literature finds that more women in the boardroom helps to curb the overconfidence of male CEOs, as represented by aggressive investment policies and better acquisition decisions. This can be particularly helpful, the authors note, during economic crises.10

Using all the talent

It is no illusion that the literature linking racial and ethnic diversity to financial outcomes is thinner than the gender literature. In part, that is because it is far more difficult to ascertain the ethnicity or race of senior decisionmakers by name, picture or biography alone, and often investors don’t even have all three of those resources. Moreover, what constitutes a minority race or ethnicity varies by country, making data collection significantly more difficult than for gender alone. (Of course, we also recognize that when gender is viewed as non-binary, data collection is also significantly more difficult for gender preference and gender identity.) But with renewed attention to racial and ethnic diversity in the wake of last year’s outpouring of concern over racial discrimination after the killings of George Floyd and others, that literature is expanding. So, too, is the literature on the impact of LGBT-friendly policies on financial and commercial outcomes.

The proxy advisory firm ISS examined ethnic diversity on the boards of Russell 3000 companies. The predominant number of different ethnicities on the average board is two, followed very closely by one; only about 4.6% of Russell 3000 company boards have more than two ethnicities represented among their directors. But the more diverse boards — those with three or more directors that belong to a minority ethnicity — outperformed their less diverse peers, and investors whose holding “concentrated in companies without ethnic diversity” lost out on an average 1.27% additional returns over a four‑year period.11

Another paper framed racial diversity in terms of competitiveness and noted that while inequity persists, Black and Latino people have increased their purchasing power over the past few decades, reaching $1.3 trillion for Black consumers and $1.6 trillion for Latinos. Through many illustrative case studies, the authors conclude companies that are able to serve these markets better can expand their customer bases faster.12

“The study found that between 2003 and 2016, US firms with more LGBT-friendly policies had higher profitability and higher stock market valuations than peers, and the positive effect was even more pronounced in states with more policies that promoted LGBT equality than those with fewer.”

McKinsey investigated a number of performance measures, including EBIT margins, and found that companies in the top quartile of executive team diversity (measured by both gender and ethnicity) outperformed the bottom quartile companies by an average of 11% over a five‑year period.13 The study covered 15 countries and seven industries.

Another piece of academic work examined the links between LGBT-friendly policies and firm performance. The study found that between 2003 and 2016, US firms with more LGBT-friendly policies had higher profitability and higher stock market valuations than peers, and the positive effect was even more pronounced in states with more policies that promoted LGBT equality than those with fewer.14 That makes sense when we consider why companies adopt LGBT‑friendly policies, says the U.S. Chamber of Commerce Foundation.15 According to survey evidence, companies embrace LGBT inclusion in order to attract the best talent — a simple but powerful motivator.

Resilience

In fact, several new studies support the role of better gender balance among senior decisionmakers when it comes to corporate resilience. One new study reaches back more than half a century to look at the Great Chinese Famine of 1959-61, which resulted in a gender gap in the supply of qualified corporate directors, as Chinese families “invest more into sons than daughters … enlarging the gender gap in the attainment of higher education.”16 But Chinese firms that had more women on the board during that time had greater increases in return on assets, suggesting that more gender-diverse boards lower risk levels and improve solvency.

That might seem like an historical anomaly, but the resilience theme keeps coming up in studies of gender balance among senior decisionmakers. A 2019 paper found that companies with more gender-diverse boards significantly improved firm performance during the Great Recession of 2008, measured by ROA.17 The authors suggest this is because a crisis increases the need for more monitoring and different advice. They also found that the effect on ROA did not persist after the crisis ended.

The resilience theme is also illuminated by our recent experience with a global pandemic. A study of the role and value of women executives in the FTSE 350 found that while the pandemic set women back in most corporate workplaces, those companies with greater numbers of women among executives achieved higher profit margins, and companies with no women executives “fell way behind others who have embraced executive gender diversity,” missing out on billions of pounds in pre-tax profit.18

A new report looking at the S&P 500 found that companies with more gender- and age-diverse boards did better during the pandemic in terms of year‑over‑year revenue growth in 11 of 15 sectors.19 The authors also echo a common theme by noting that this is correlation, not causality, and that it may be that more diversity results in better decision-making, or that companies that are already more diverse tend to recruit more diverse boards. Either way, the correlations are facts.

Finally, a 2021 report found that companies in the S&P 1500 with more gender-diverse boards had higher abnormal returns during the outbreak of COVID-19. The authors suggest that this finding was consistent with the idea that the market saw board gender diversity as a positive signal of the firm’s ability to navigate through the crisis, or a sign of management quality.20

The impact of diversity on financial performance isn’t limited to companies. Though the literature on diversity in fund management is somewhat thin, and diversity in the financial management industry is generally much worse than in many other sectors, it is interesting to see work that looks at differential results for homogeneous and heterogeneous groups of fund managers. A new academic study in 2021 looked at hedge fund management and found that diverse fund management teams outperformed homogeneous teams by 5.03 — 8.1% per year, after adjusting for risk. Diversity was measured on several scales, including education, work experience, nationality, gender and race.21 

Innovation

In the last half-decade or so, more researchers have taken on the question of whether a connection between diversity and innovation exists. At some level, even outside the realm of high tech, companies depend on innovation for survival and growth, even if it’s mostly about keeping up with peers. It also makes sense that companies that take advantage of all the talent available to them, and the advantages of bringing new ideas to any decision-making body, could be more innovative. But a logical argument can’t stand forever without evidence; it’s not surprising that there is such evidence.

A 2019 analysis from MSCI found that companies that are “recognized innovators” in the All Country World Index (ACWI) had a higher percentage of women directors and were twice as likely to have a longstanding critical mass of women directors.22 

Diversity also is associated with technological advantage at the national level. A 2019 study showed that countries were significantly more likely to gain advantages in patenting certain technologies if they were open to migrant inventors.23  The authors also noted that migrant inventors are more likely to contribute to patenting in the early stages of a given technology rather than the later stages.

Human resource management

A lot of ink has been devoted to the fact that millennials — the generation entering the workforce now — are very interested in working for companies with purpose‑driven cultures that they can believe in.24 So it is no surprise to find that companies that are more socially responsible are able to attract better talent and more interest in new job openings. One study found that when companies advertise work as socially oriented, the number of applicants increased by 25% and attracted new employees that were more productive and produced higher quality work.25

The importance of the labor force gained particular attention during the pandemic, spotlighting the importance of front‑line workers (who are often not the executives and highest-paid employees). Women,26 and particularly women of color,27 tended to suffer disproportionately during the pandemic, because many of them still were responsible for the majority of home duties, including childcare and home schooling, even when their husbands or partners were also working from home.

While the effects of the pandemic are regarded as unique, it did help to highlight the importance of treating employees fairly and equitably and creating opportunities for better work-life balance under all circumstances. The importance of paid family leave was, and remains, a particular focus.

One 2019 study looked at the impact of paid family leave in the period before the pandemic began and found that firms offering paid family leave was causally related to reduced turnover and an increase in female leadership, with the end result that productivity in firms that did offer it increased by about 5% compared with a control group.28 

The gender pay gap is another focus. The gap is global; there is no country where women’s pay is equal to that of men, on average. But where organizations do reduce the gap, there is a performance bonus: Enterprises that make formal commitments to equal pay are 54% more likely to beat average employee turnover in their industries and 46% more likely to have higher ratings on employer review site Glassdoor.

Environmental impact

We tend to think about diversity primarily in social terms, for obvious reasons. But there is also a connection to environmental impact that may not be so apparent at first glance.

MSCI noted in a 2021 report that the companies in the ACWI that had achieved sustained board gender diversity (measured as having at least three women on the board for at least three years) also had better records in reducing carbon emissions than peers. As investment markets grow increasingly aware of climate transition risks, emissions reduction becomes increasingly valuable on financial markets.30

Another study that focused on the United States made a similar finding: Companies with at least two women were significantly more likely to make commitments to renewable energy. That, in turn, had a positive impact on financial performance.31

Yet another paper took a different route to impact, looking at the relationships between board gender diversity and disclosure of greenhouse gas (GHG) emissions, and how both affect corporate reputations. The authors found a positive but not significant relationship between gender diversity on the board and disclosure of emissions, while the relationship between GHG disclosure and corporate reputation is both positive and significant.32

Finally, another 2019 paper found that firms with female CEOs produced less air and water pollution and had lower GHG emissions. The reductions in pollution and greenhouse gas emissions were particularly noteworthy when the gender of a firm’s CEO changed from male to female.33

The Big Picture: Diversity and the Economy

We may have moved beyond simplistic notions of how markets will see gender diversity, particularly when regulated, but there is still enough literature in the world — much of it fair and peer-reviewed — that does not find significant correlations or effects between diversity and financial or economic performance to provide fodder for a lot of writing and dialogue questioning whether there really is an effect or if what we’re seeing is just spurious. There are a couple reasons to think that we’re not just living in an age of happenstance.

First, we have found far more studies that find a positive and significant relationship between diversity and financial performance than those that find negative relationships. There are some that find no correlation, of course, and there may well be times and cases where that is in fact the case in the real world. If we have learned anything from being in the field of asset management for decades, it’s that anything can and may outperform or underperform, depending on the circumstance of the moment.

The Impact of Quotas


Though there is abundant evidence that diversity is more likely to have positive impacts for companies and investors than homogeneity, resistance to mandated diversity persists. In the first decade of the new millennium, Norway became the first country to require a certain percentage of women on boards. One academic study found that mandate resulted in an initial significant drop in Norwegian company stock prices and Tobin’s Q and led to younger and less experienced boards.34 That study has been cited ever since then by those who oppose mandated board diversity.


But things have changed. Studies done as other countries or jurisdictions have mandated gender diversity are more numerous, and the newer studies are much less likely to show the same negative immediate consequences that the early Norway study found. For example, a paper looking at the imposition of board gender quotas in France found that companies forced to comply with the quota increased profit margins by 5.4% compared to firms with unchanged boards.35 The authors attribute at least some of the change to better cost control, particularly in outsourcing and subcontracting.


Germany implemented its board diversity mandate in 2016, requiring a minimum of 30% representation of each gender on the supervisory boards of many large corporations. The study concluded that there was no negative impact on financial performance as companies came into compliance.36


California implemented a gender diversity quota system in 2018, and while some predicted that this would harm companies’ financial performance by bringing inexperienced women onto corporate boards, that has not been the case. The law did, indeed, result in more women on California company boards, but the authors of a study examining the impact of the new regulation found that any losses in stock prices were due to companies not replacing existing directors with the lowest shareholder support — not the introduction of women to boards.37 In fact, the women that were brought onto corporate boards as a result of the mandate were held to a higher standard than existing and new male directors.

But the fact that the positive and no-correlation studies vastly outweigh those that find negative correlations gives us a clue that what we’re seeing isn’t a mirage. Moreover, while some cite metastudies as strong evidence of a lack of correlation, it’s worth noting that at least one of the two metastudies often cited has found a significant, though small, correlation between gender diversity and financial performance, and the other one included many studies from places where financial markets are thin or weak, and finding any signal in the noise of these markets is surpassingly difficult. In short, what comes out of a metastudy depends a lot on what went in. Finally, at least one of those metastudies used only peer-reviewed academic work. There’s a good reason to do that, but there’s an equally good reason to include some of the work by financial institutions as well. While big banks and asset managers aren’t generally peer reviewed, they use replicable, reputable methodologies such as portfolio attribution that are used all the time to illuminate performance, and that provide decision-useful information about markets that are a lot more relevant to financial decision-making — North America, Europe, developed markets worldwide — than some of the academic studies that may focus only on something like family-owned businesses in Ghana.

Moreover, there are some places where diversity simply isn’t as valuable. In countries whose laws, customs and cultures are not particularly egalitarian, diversity may not be as much of a financial advantage. One Harvard study, for instance, noted that the effect of gender diversity on performance varied across the 35 countries studied, depending on the acceptance of diversity in any specific country/industry context.38

Overall, however, gender equality is positively and significantly related to economic equality. A new study examined 150 nations’ history in women’s suffrage, representation of women in government positions, fertility rates and overall gender equality, and found that better gender equality was correlated with lower income inequality.39 A recent analysis from Bank of America reached a similar conclusion, noting that closing gender and race gaps could have added $2.6 trillion to United States economic output.40 A Bloomberg analysis reported that globally, economic performance would get a $20 billion boost if women were educated similarly with men and were equally well represented in the workforce.41

Summary

Diversity is a good thing to embrace — from an economic standpoint as well as an ethical one. The evidence that talent is not differentially distributed by gender, age, race, ethnicity or geography is abundant, and robust. It stands to reason that diversity has value in business and on financial markets, where competitiveness depends on the ability to make productive and fair use of all the talent available. The fact that different people bring different experience, competence and skill to the table based not only on their education and training, but their human experience, is logical — and demonstrably valuable to business and investors, as well as society.


1 Rey Deng, L’Hocine Houanti, Krishna Reddy and Michel Simioni, “Does Board Gender Diversity Influence Firm Profitability? A Control Function Approach,” Social Science Research Network, June 2020.

2 Shaheen Contractor and Christopher Cain, “Gender Valuation: Quality & Size See Correlations,” Bloomberg Intelligence, 06/24/2021.

3 Rebecca Cassells and Alan Duncan, “Gender Equity Insights 2020: Delivering the Business Outcomes,” BCEC/WGEA Gender Equity Series, Issue #5, March 2020.

4 S&P Global Market Intelligence, “#ChangePays: There Were More Male CEOs Named John than Female CEOs,” Oct. 15, 2019.

5 Francesca Arnaboldi, Barbara Casu Lukac, Angella Gallo, Elena Kalotychou and Anna Sarkisyan, “Can Gender-diverse Boards Reduce Bank Misconduct?” PRI Blog, March 20, 2020.

6 Karl V. Lins, Lukas Roth, Henri Servaes, and Ane Miren Tamayo, “Sexism, Culture, and Firm Value: Evidence from the Harvey Weinstein Scandal and the #MeToo Movement,” University of Alberta School of Business Research Paper No. 2019-509, European Corporate Governance Institute – Finance Working Paper No. 679/2020, (August 14, 2021).

7 Ralph A. Walkling, “The Consequences of Managerial Indiscretions,” Harvard Law School Forum on Corporate Governance, May 16, 2017.

8 Robert Mooibroek and Willen F.D. Verschoor, “Stock Market Response to CEO Sexual Misconduct: Evidence from the #MeToo Era,” Social Science Research Network, Jan. 22, 2021.

9 Shiu-Yik Au, Ming Dong and Andreanne Tremblay, “Employee Sexual Harassment Reviews and Firm Value,” Social Science Research Network, April 29, 2021.

10 Jie Chen Woon, Sau Leung, Wei Song, Marc Goergende, “Employee Sexual Harassment Reviews and Firm Value,” Social Science Research Network, April 29, 2021.

11 ISS Insights, “Commentary: Black History Month — Looking Back, Looking Forward,” Feb. 17, 2021.

12 Angela Glover Blackwell, Mark Kramer, Lalitha Vaidyanathan, Lakshi Iyer and Josh Kirschenbaum, “The Competitive Advantage of Racial Equity,” FSG and PolicyLink, October 2017.

13 Vivian Hunt, Sundiatu Dixon-Fyle, Sara Prince, and Kevin Dolan, “Diversity Wins,” McKinsey & Company, May 2020.

14 Veda Fatmy, John Kihn, Jukka Sihvonen and Sami Vähämaa, “Does Lesbian and Gay Friendliness Pay Off? A New Look at LGBT Policies and Firm Performance,” Social Science Research Network, May 28, 2021.

15 U.S. Chamber of Commerce Foundation, “Business Success and Growth Through LGBT-Inclusive Culture,” April 9, 2019.

16 Yangming Bao and Di Lu, “Board Gender Diversity and Firm Performance: Evidence from Supply-Side Shocks in China,” Social Science Research Network, Nov. 4, 2019.

17 Suwongrat Papangkorn, Pattanaporn Chatjuthamard, Pornsit Jiraporn and Sirisak Chueykamhang, “The Effect of Female Directors on Firm Performance: Evidence from the Great Recession,” Social Science Research Network, May 17, 2019.

18 Margaret McDonagh and Lorna Fitzsimmons, “Women Count 2021: Role, Value and Number of Female Executives in the FTSE 350,” Executive Pipeline, 2021.

19 Rajalakshmi Subramanian, “Lessons from the Pandemic: Board Diversity and Performance,” BoardReady, July 13, 2021.

20 Farida Akhtar, Madhu Beeraraghavan and Leon Zolotoy, “Board Gender Diversity and Firm Value in Times of Crisis: Evidence from the COVID-19 Pandemic,” Social Science Research Network, June 28, 2021.

21 Yan Lu, Narayan Y. Naik and Melvyn Teo, “Diverse Hedge Funds,” Social Science Research Network, Jan. 22, 2021.

22 Meggin Thwing Eastman, “What Innovative Companies and Women on Boards Have in Common,” MSCI, March 8, 2019.

23 Dany Bahar, Prithwiraj Choudhury and Hillel Rapoport, “Migrant Inventors and the Technological Advantage of Nations,” CESifo Working Paper No. 7690, July 23, 2019.

24 See, for example, Jennifer Robison, “Millennials Worry About the Environment — Should Your Company?” Gallup, May 29, 2019; Adele Peters, “Most Millennials Would Take a Pay Cut to Work at a Environmentally Responsible Company,” Fast Company, Feb. 14, 2019; and Peggie Pelosi, “Millennials Want Workplaces with Social Purpose. How Does Your Company Measure Up?” Talent Economy, Feb. 20, 2019.

25 Daniel Hedblom, Brent R. Hickman and John A List, “Toward an Understanding of Corporate Social Responsibility: Theory and Field Experimental Evidence,” National Bureau of Economic Research Working Paper 26222, September 2019.

26 Annelise Thim, “Companies Can’t Ignore the ‘She-cession’ Created by the COVID-19 Pandemic,” BSR, Feb. 4, 2021.

27 Meredith Covington and Ana H. Kent, “The ‘She-Cession’ Persists, Especially for Women of Color,” Federal Reserve Bank of St. Louise, Dec. 24, 2020.

28 Benjamin Bennett, Isil Erel, Lea Henny Stern and Zexi Wang, “Paid Leave Pays Off: The Effects of Paid Family Leave on Firm Performance,” Fisher College of Business Working Paper No. 2019-03-029, Jan. 12, 2021.

29 Tamara Phillips, “The Real-World Impact of Gender Pay Gaps,” World at Work, May 2019.

30 Christina Milhomem, “Women on Boards: The Hidden Environmental Connection?” MSCI, March 8, 2021.

31 Muhammad Atif, Mohammed Hossain, Md. Samsul Alam and Marc Goergen, “Does Board Gender Diversity Affect Renewable Energy Consumption?” Journal of Corporate Finance, Vol. 66, 2021.

32 Fransiskus E. Daromes and Monica, “Women on Boards and Greenhouse Gas Emission Disclosures: How Their Impact on Corporate Reputation,” [sic], Social Science Research Network, Aug. 28, 2019.

33 Zigan Wang and Luping Yu, “Are Firms with Female CEOs More Environmentally Friendly?” Social Science Research Network, April 23, 2019.

34 Kenneth Ahern and Amy Dittmar, “The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation,” Quarterly Journal of Economics, May 2011.

35 Helene Maghin, “Cracks in the Boards: The Opportunity Cost of Governance Homogeneity,” Social Science Research Network, May 14, 2021.

36 Alexandra Fedorets, Anna Gibert and Norma Burow, “Gender Quotas in the Boardroom: New Evidence from Germany,” DIW Berlin Discussion Paper No 1810(2019), July 23, 2019.

37 Marina Gertsberg, Johanna Mollerstrom and Michaela Pagel, “Gender Quotas and Support for Women in Board Elections,” NBER Working Paper No. 28463, April 10, 2021.

38 Leitan Zhang, “An Institutional Approach to Gender Diversity and Firm Performance,” Forthcoming in Organization Science, Social Science Research Network, Harvard Business School, 2020.

39 Michael A. Nelson and Rajeev K. Goel, “Does Gender Equality Translate into Economic Equality? Evidence from about 150 nations,” CESifo Working Papers 8949/2021, March 2021.

40 Saijel Kishan, “Bank of America Says U.S. Economy Is Hurt by a Lack of Workforce Diversity,” Bloomberg, March 3, 2021.

41 Catarina Saraiva, “Women Could Give $20 Trillion Boost to Economic Growth by 2050,” Bloomberg Equality, March 9, 2021.

INDEXES:

The Financial Times Stock Exchange 350 Index (FTSE 350) is a market capitalization-weighted stock market index incorporating the largest 350 companies by capitalization that have their primary listing on the London Stock Exchange.

The Russell 1000 Index is a subset of the Russell 3000 index. It represents the 1,000 top companies by market capitalization in the United States.

The Russell 3000 Index is a market capitalization-weighted equity index that tracks the performance of the 3,000 largest U.S.-traded stocks.

The MSCI ACWI (Net) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 50 country indexes comprising 23 developed and 27 emerging market country indexes. The developed market country indexes included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom and United States. The emerging market country indexes included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. Performance for the MSCI ACWI Index is shown “net,” which includes dividend reinvestments after deduction of foreign withholding tax.

The S&P 500 Index is an unmanaged index of large capitalization common stocks.

The S&P 1500, or S&P Composite 1500 Index, is a stock market index of US stocks made by Standard & Poor’s. It includes all stocks in the S&P 500, S&P 400, and S&P 600.

DEFINITIONS:

C-suite comprises the senior leaders of an organization, whose titles typically begin with “C,” as in “chief.”

Earnings Before Interest and Taxes (EBIT) is revenue minus expenses, excluding tax and interest. EBIT indicates a company’s profitability. 

Return on assets (ROA) measures how much money a company earns by putting its assets to use. Tobin’s Q, or Q Ratio, equals the market value of a company divided by its assets’ replacement cost.

Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its management team) is managing the equity that shareholders have contributed to the company.

Tobin’s Q, or Q Ratio, equals the market value of a company divided by its assets’ replacement cost.

IMPX-0657

Julie Gorte, Ph.D.

Senior Vice President for Sustainable Investing

Julie Gorte is Senior Vice President for Sustainable Investing at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

She oversees environmental, social and governance-related research on prospective and current investments as well as the firm’s shareholder engagement and public policy advocacy. Julie is also a member of the Impax Gender Analytics team.

Prior to joining the firm, Julie served as Vice President and Chief Social Investment Strategist at Calvert. Her experience before she joined the investment world in 1999 includes a various number of roles. Julie spent nearly 14 years as Senior Associate and Project Director at the Congressional Office of Technology Assessment. Additionally, she has held the roles of Vice President for Economic and Environmental Research at The Wilderness Society, and Program Manager for Technology Programs in the Environmental Protection Agency’s policy office and Senior Associate at the Northeast-Midwest Institute.

Julie serves on the boards of the Endangered Species Coalition, E4theFuture, Clean Production Action and is the board chair of the Sustainable Investments Institute.

Julie received a Ph.D. and Master of Science in resource economics from Michigan State University and a Bachelor of Science in forest management at Northern Arizona University.

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