Norway’s sovereign wealth fund – the world’s biggest single owner of listed shares – has firmed up its attitude towards gender diversity within corporate boards, saying firms where either gender had representation of less than 30% should consider targets and report on progress.

Setting out its official stance as an asset owner on board diversity in a new position paper, Norges Bank Investment Manager (NBIM) said: “While there are many different dimensions to diversity, we are particularly concerned by persistent underrepresentation of women on boards.”

The central bank arm made three main points on board diversity in the paper.

Firstly, it said boards should ensure they could bring a broad range of perspectives and approaches to decision-making.

“The board should have a diversity of competences and backgrounds,” said NBIM, which runs the NOK11trn (€1trn) Government Pension Fund Global (GPFG).

In the second point, NBIM said the board should have an appropriate gender balance.

“Boards where either gender has less than 30% representation should consider setting targets for gender diversity and report on progress,” it said in the paper.

As a third point, the Oslo-based manager said the board should have a formal nomination process to identify potential candidates who could contribute to diversity on the board.

“The process should include a rigorous search extending to a broad range of people with different backgrounds,” it said.

Explaining the background for NBIM’s position, which the investor said would serve as a basis for its discussions with company boards, the organisation said boards should regularly assess whether they collectively had the right mix of competences and backgrounds in order to avoid group thinking and bring a diversity of thought to board discussions.

“While there are many different dimensions to diversity, we are particularly concerned by persistent underrepresentation of women on boards,” NBIM said.

“Such underrepresentation may indicate that a board is recruiting too narrowly and does not have a clear view of the full range of backgrounds and competences required to be effective,” it said.

NBIM said the representation of women on boards had been increasing in recent decades, as the participation of women in the labour market had grown, and more markets had introduced specific requirements for gender diversity.

On average, it said, 26% of board members in G7 countries were female, adding that in Europe, regulatory requirements regarding this representation varied between 30% and 40%.

Nicolai Tangen, NBIM’s CEO, has stressed his support for gender diversity within his 500-strong organisation even before he took the top job last September.

Announcing his chosen top management line-up in October, he included 33% women, but also said the proportion of females at NBIM was not good enough.

Until three years ago, NBIM had an all-male leadership team.

Church investors extend, tighten board diversity expectations

The £21bn Church Investors Group has tightened its voting policy with regard to board diversity, extending its expectations to include ethnic diversity and increasing its minimum expectations for gender diversity.

Members of the group, predominantly drawn from the UK and Ireland, will not support the re-election of nomination committee chairs of FTSE100 companies where there is no ethnic minority representation on the board, it announced today.

Members will also vote against the nomination committee chair at FTSE350 companies where less than 40% of the board is female. Members will also consider voting against the entire nomination committee where women make up less than 30% of FTSE100 board and less than 20% of FTSE250 boards.

“Church investors have led the way in using their votes at company AGMs to support increased board level gender diversity,” said Reverend Canon Edward Carter, chair of the Church Investors Group. “Now is time to raise the bar even further and challenge companies to appoint boards which are truly reflective of the society in which we live, simply being satisfied that 30% of the board is female is no longer good enough.” 

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