Members benefit from more superannuation board diversity

The superannuation industry has moved from a ‘laggard’, when it comes to female representation on boards, to performing much better than its ASX 200 counterparts.

As you can see in the table below, of all 661 trustee directors of the 81 super funds regulated by the Australian Prudential Regulation Authority (APRA), 253 (38.3%) were women as at June 2021.

Percentage of women on boards

Sources: Women in Super; 2021 data – APRA and AICD Gender Diversity Progress Report

What’s more, more than half of those 81 funds had appointed more than half of their board positions to women. The table below is a list of all the super funds that had 50% or more female trustees as at June 2021.

Source: APRA annual fund level superannuation statistics June 2021

ESG focus

Alex Dunnin, executive director of research and compliance at Rainmaker says that about one-third of trustees of ESG super funds are also women.

“While only one-third of trustees are women, if your fund has a woman as chair or CEO, the fund is odds on to have a gender-neutral board. It suggests that if the fund’s ultimate leaders are women, the fund board will be balanced,” Dunnin says.

For example, industry fund HESTA has a female chief executive officer, Debbie Blakey, a female chief investment officer and financial officer and a female chief experience officer. Of its 14 board members, 9 are also female. Blakey has been leading the fund since 2015 but wasn’t the fund’s first female CEO either. Prior to Blakey’s appointment, the fund had been led by Anne-Marie Corboy, who had been CEO for 16 years.

Performance matters

HESTA’s performance is strong too. It features in the top ten funds for annual returns over the past 10 years with an average return 8.5% per annum over the decade and delivered returns of 17.9% over the year to end December 2021.

While funds that have more diverse boards may not be outperforming in the current environment, Dunnin stresses they are definitely not underperforming.

And women are, in fact, more likely to be on the boards of super funds that have an obvious emphasis on the long term through investments focussed, for example, on the climate transition.

Using the example of HESTA again, the fund was one of the first major funds to announce a commitment to a reduction in absolute carbon emissions in its investment portfolio by 33% by 2030 and to be ‘net zero’ by 2050.

“Climate change presents a financial risk to the HESTA investment portfolio and the world in which our members will retire,” Blakey said when announcing the policy in mid 2020.

HESTA was also very vocal in voting against the recent proposed AGL demerger with Blakey saying that responsible investors had a responsibility to their members to go where the biggest emissions were and try and change the behaviour of those companies first.

“We cannot simply divest away from the risk of Australia being slow to transition to a low-carbon future,” she said.

So what?

But do we really need to focus on whether women on super fund boards or  in management, deliver outperformance? There are numerous studies around more representative leadership of any company or entity leading to improved performance, but that is usually because such diversity leads to a diversity of thought, opinions and approaches – not necessarily because women might be better at leading, investing or managing.

However, there is no denying that anybody that does not conform to the norm – that is, is not white and male – will often have to be much better than the norm to get into positions of power.

“If women are leading your super fund they’ve probably had to work much harder and be much tougher and smarter to get there,” Dunnin says.

“Put another way, we may tolerate an incompetent man but we rarely tolerate an incompetent woman. While this may seem cheesy, it means that if a woman is running your super fund or on the board, you’re pretty likely to be in good hands.”

And Claire Braund, founder and executive director of Women on Boards, points out that male appointments to boards are rarely put under the same scrutiny as women.

Braund compiles the statistics around female board representation and is also non-executive director of Coast Shelter Emergency Accommodation and president and building committee chair of the Central Coast Conservatorium of Music.

“Why do women, when they go on boards, have to somehow prove that the sector gets an uptick from putting women on boards, because people never put the same requirements on men,” she says.

Tackling the super gender gap

Braund correctly points out that the big gender issue for super is the gap between how much super women will ultimately retire on compared to their male counterparts.

“Because while we continue to pay the same rate of super on a pay where women are paid less because [they work in] caring professions, while we have a gender pay gap, we are going to have a superannuation gap.

“But I think that having more women on the board of super companies perhaps, you know, may put a focus on grappling with what are some very difficult policy issues,” says Braund.

Female-led HESTA was also one of the first super funds to welcome the new government following the recent Federal election. Blakey suggested that the election results made it clear that the community was now focussed on gender equity and hoped that the new government would make women’s economic security in retirement a real priority.

The bottom line

The more representative an organisation is of the community that it represents, the better the outcome for community members will be. This is as true of super as it is for ASX-listed companies and we can only hope that super funds will continue to improve their record in this manner and we see more female-led funds in the not-too-distance future.