UK stock market giant Legal & General Investment Management (LGIM) has upped pressure on companies to improve gender balance on corporate boards.
Legal & General, who manage around £1 trillion assets, will vote against chairs of the UK’s 350 largest public companies if their boards are not at least 25% female.
LGIM’s efforts to encourage change in the markets in which it invests focuses on improving diversity on boards and nomination committees.
In 2017, the company voted against 215 UK pay deals – a 40% increase on the previous year, as well as opposing 37 board chairs due to poor diversity.
It has also written to many CEO’s around the world, setting out strategies to address these issues and detailing the improvements they expect to see in their companies.
Their report precedes annual general meetings where shareholders have an opportunity to voice their concerns on the management of large public companies.
Sacha Sadan, the director of corporate governance at Legal & General, said: “Due to the media spotlight on failures in corporate stewardship, it can seem as though many companies are not doing a good job in Environment, Social and Governmental-related matters.
“In fact, the vast majority of companies are making significant progress – we simply believe there is more to be done”
Corporate governance has been under the microscope over the last few months after the sudden liquidation of construction company Carillion that left hundreds unemployed.
LGIM are already voting against all male boards and have backed 95% of climate change resolutions in the US as of 2017 as part of this initiative.
This is an uncharacteristically aggressive approach for an asset management company, as they attempt to meet government recommendations that suggest a third of senior directors should be female on FTSE’s 350 boards.