Building the diversity pipeline – two new US initiatives

Calpers and Calstrs, two US pension funds, are to launch a database of independent directors that will help improve corporate governance in companies held in their portfolios. The two funds, with combined assets of about $320bn, have been leading the charge in the US for shareholders to play a positive role in board selection and performance.

Looking back at the financial crisis, Anne Simpson, director of corporate governance for Calpers, told the FT on April 5:

“All of these banks, almost to a fault, ticked the boxes on the corporate governance agenda. But it was a fig leaf to hide that the boards in no way had a grip on what the new business was they were getting into.”

The database, called the “Diverse Director DataSource”, is designed to provide companies with a rich source of independent directors from different backgrounds.

On April 6, the US-based Robert Toigo Foundation launched All a Board, a diverse “clearing house” of directors, aiming to connect women and minority board candidates with public companies and not-for-profit organisations. The foundation was launched in 1989 to increase diversity in the finance industry.

Nancy Sims, president and chief executive of the Robert Toigo Foundation, said in a statement:

“The return on investment of diverse boards is well documented. With the launch of All a Board, we’re focused on eliminating shortage of talent as the rationale for why boards lack diversity. Candidates with diversity of thought, gender, ethnicity and multicultural perspectives exist—and with All a Board [they] will be easier to identify and reach.”

Those of us in the UK with long memories will remember ProNed, a 1970s initiative sponsored by the Bank of England to improve corporate governance in banking. It is now part of Egon Zehnder International, the executive search company.

The question is whether these two initiatives, and others that may follow their lead, will encourage board chairmen to open the door to independent directors who are not in the inner circle instead of finding ways to keep the boardroom a closed club.

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