Why did Nordea Asset Management launch this fund, and why now?
Audhild Aabø: Nordea Asset Management has, for many years, increasingly focused on ESG analysis. In the beginning, the ESG research was mainly used mainly as a negative screening measure in the investment process—screening away companies as a way of mitigating risk. But upon closer inspection, we discovered investment opportunities that could be exploited by using ESG as a positive screen to choose companies. One of these investment opportunities is focusing on gender diversity in a company. Also, as an early signer of UNPRI, Nordea is committed to the UN’s Sustainable Development Goals—the fifth goal focuses on gender equality.
In recent years, society’s increased focus on diversity has led more companies to report on their gender diversity variables—which has made this fund possible.
Gender diversity is a new concept for many companies. How can they benefit from embracing this trend?
Julie Bech: In developed countries with an aging population, like Japan, studies show that more gender diversification in the workforce increases GDP. At the corporate level, human capital is something a company can really profit on, and something that is very hard for competitors to copy. There is great demand for the best talent, so if a company succeeds in creating equal opportunities for everyone, it will have a wider pool to choose from. This gives the company an edge compared to competitors who will not have the same growth potential. Further, the company will be more capable of maintaining and facilitating the development of its best talent if it takes an objective approach to advancing employees. Likewise, when a company hires externally, the pool of talented candidates is simply larger if it includes all available candidates. There are multiple studies that show gender diversity is good for a company’s bottom line. This is, amongst other things, due to the widening of the talent pool.
What do you look for in a company when evaluating its gender diversity?
Audhild Aabø: When estimating the gender diversity within a company, we look at the level of gender diversity across different management levels. How gender diversity has progressed in the company and the gender diversity of a company relative to the diversity in the company’s employees. We also look at whether the company has any policies in place for promoting equal opportunities. An important first step in achieving equal opportunities in an organisation is awareness of how the company currently operates. This helps us get a feel for how embedded diversity and inclusion are in the company’s values, and if they are succeeding in bringing parity into the organisation. Looking at the last 10 years there has, in general, been improvement in gender diversity, but the progress is slow and there are clearly industries and countries that are further ahead than others.
Personally, I believe initiatives that allow women to make independent business decisions are better than simple quotas. That way women earn their place and are rewarded for the hard work they do. It would be detrimental to the gender diversity cause if it ends up being perceived as women getting a free ride due to quotas. You might be able to get the percentages for females in higher managerial positions up faster, but you must also take the data quality into account. Diversity and inclusion should be a means to hire, maintain and develop the best talents, not merely a checkbox to mark.
What advice can you offer to women starting out in the industry today?
Audhild Aabø: My advice would be to embrace the individual expertise and aptitude you contribute by simply being a woman and take all possibilities that might show up, even if the timing is not optimal or you feel you are thrown in to the deep end. In general, fully succeeding in gender equality requires changes in society, legislation and company policies and values. It is about enabling both genders to achieve their potential; giving both sexes equal opportunities.
What do you hope to achieve with this fund?
Julie Bech: First and foremost, we want to create value for our customers. This fund offers clients the possibility of good returns with a twist where they can actually impact society by reaching sustainability goals related to diversity. Sustainable investments will play a big role in the future. The companies willing and able to put in the extra resources to make sure they are diverse will benefit from those actions going forward.