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Simplicity's bold plan to make New Zealand businesses more diverse

Simplicity, the nonprofit KiwiSaver provider which owns shares in the top 50 listed companies in New Zealand, has written to all top 50 CEOs advocating for full diversity in board and senior management within five years. But will anyone listen?

Simplicity founder Sam Stubbs says diversity can be across gender, ethnicity, age or ability. “It’s not up to us to tell the companies what diversity should mean to them, but it will be obvious when you see photos of the board and management when it’s been achieved.”

Companies have been asked to submit a plan within six months, and fully implement it within five years.

The planning phase complements new NZX requirements for reporting on diversity. A five-year implementation allows diversity to be incorporated into board rotation and management development programmes. “Progress, or lack thereof, will be obvious within a year. Companies embracing diversity will be applauded. If there's no progress, then as a shareholder there are a range of options open for us to take action,” says Stubbs.

 

The move is long overdue. Stats from the NZX reveal not enough women are serving as directors of Kiwi businesses. Of all the different companies listed on the NZX, a mere 13 percent had female directors. Even worse, the number is actually down from 2016, when 14 percent of companies had female directors.

The numbers are all the more appalling considering that women held 18.8 percent of the board seats on the 2016 Fortune 1000, which lists the 1,000 largest companies in the world. It also is far below that of other industrialised nations like Germany, where about 22 percent of board seats were held by women (according to stats from the Hans Böckler Foundation) prior to a law that went into effect in January requiring companies to ensure a minimum of 30 percent of board seats be held by women.

Even Australia is blowing the Land of the Long White Cloud out of the water when it comes to women on boards. Women held about 23.4 percent of board seats on ASX 200-listed companies in June 2016 – a nearly three-fold increase from 8.3 percent in 2009.

 

 

Stubbs says that Simplicity’s status as an investor in all New Zealand’s Top 50 companies had motivated its interest in being an activist shareholder, focusing on the long term interests of those companies.

In terms of its interest in diversity, Simplicity will publish an annual diversity scorecard for all companies, which will be made widely available.

High profile economist Shamubeel Eaqub has recently joined the Simplicity board, and will be spearheading this initiative, with AUT diversity researchers assisting with research and data analysis.

 

Shamubeel Eaqub.

Research shows that, over time, companies with diversity in management and governance significantly outperform companies with less diverse representation. Only four percent of CEOs and Chairpersons of NZX 50 companies are women. Only 13 percent of directors are women. Even fewer are Maori, Polynesian or Asian.

This contrasts with public sector boards, where significant progress has been made through a dedicated programme to increase diversity. Public sector boards now have 43 percent women directors with 45 percent of senior leadership roles within the public sector held by women.

 

 

In recent visits to the CEOs of the NZX50, Simplicity was encouraged by the positive response to Simplicity stepping up to be an activist shareholder representing Kiwisavers.

A common complaint from the CEOs was the lack of support from traditional shareholders for long term decision making, with too much focus on short term dividends.

Stubbs says that diversity is simply the way forward. “As a KiwiSaver manager, we have a golden opportunity to help shape the role our largest companies will play in our future,” he says. “Diversity is a clear first priority.”

KiwiSaver is predicted to be at least $200 billion by 2030. With an estimated $100 billion invested in New Zealand, KiwiSavers will increasingly own a substantial amount of New Zealand’s listed companies.

“Slowly but surely, KiwiSavers are buying back New Zealand, and we intend to make sure their long-term interests as investors are protected,” says Stubbs.

Sam Stubbs.

Organisations, academics and entrepreneurs are also taking a stand for diversity. Vodafone earlier this year announced its Vodafone ReConnect programme, designed to attract talented women who have left the workplace for an extended period of time who would like to return to work on a full-time or flexible basis. University of Sydney associate professor Rae Cooper also said that despite decades of talk, women’s careers are still hampered by glass ceilings, glass walls that segregate men and women into gender-determined roles and “sticky floors” that confine women to dead-end jobs. Lightning Lab ran Lightning Lab XX last year, New Zealand’s first female-founder focused accelerator programme. My Food Bag co-founder and former Telecom chief executive Theresa Gattung has also launched new venture capital fund, which aims to raise capital from women, for women entrepreneurs. The fund will make it easier for women entrepreneurs to get funding – especially important since more than 97 percent of current venture capital funding goes to men.

Check out an earlier interview with Theresa Gattung:

That’s not all that’s being done, either. For Facebook’s #SheMeansBusiness livestream – a 24-hour event featuring people from across the globe speaking about the need for equality – Lizzie Marvelly, editor of unabashed feminist outlet The Villainesse, spent much of her talk discussing the gender pay gap (women in New Zealand are paid only about 88 cents for every dollar a man makes for the same work, and even less for Māori and Pasifika women) and that there’s only one female CEO of an NZX-listed company (Kate McKenzie of Chorus). Her talk also featured an appearance by Eat My Lunch co-founder Lisa King, who shared her story of being a woman in business and the challenges she’s faced and successes she's had.


Then there's the words of Xero managing director Anna Curzon, who spoke to Idealog in March: “It is an indictment and it isn’t good enough. We need to address why this happening and rather than just talk about it, make change. There is more than enough evidence and research available to show that diversity in leadership teams and boards drive better outcomes and performance of the business. In fact, it is negligent if the boards and management of NZX-listed companies do not have a plan to address diversity on their teams.

“In my experience, change is CEO-led. They set examples in the decisions they make every day. Diversity can’t just be a policy written on a document stowed away in a folder somewhere, and dusted off when the next Diversity Awards come around. A focus on diversity needs to filter down through the business from the top down, so that it’s palpable within the culture of the company.”

Check out an earlier interview with Anna Curzon: