For decades, General Motors cultivated a “man’s world” image for its cars and trucks. The Chevy Silverado pickup is still aimed at rugged outdoorsmen and construction businesses. And let’s not forget the lumbering Hummer, based on the Humvee military vehicle.

Who could have imagined that, by 2021, GM would have more women on its board than any other carmaker, not to mention most other businesses?

Mary Barra, an electrical engineer, broke the mould when she became chairman and CEO seven years ago. Women now occupy seven of GM’s 13 board seats. The latest appointee, announced in March, was Meg Whitman, Hewlett-Packard’s former CEO. “Our diverse board of directors is a competitive advantage for GM as we work to deliver a better, safer and more sustainable world,” Barra noted.

Pressure to diversify corporate boards has grown in recent years in line with the realization that a business is unlikely to reach its full potential unless its leadership mirrors its employees, customers and suppliers. In a review of U.S. initial public offerings over four years, Goldman Sachs concluded that companies with at least one female director performed significantly better than those with none.

Nasdaq proposed last December that at least two members of every listed company’s board not be straight white men. In most cases, one must be a woman, the other a member of an under-represented minority or LGBTQ.

Even so, few companies have so far matched GM’s record. Women make up fewer than half the directors at 95% of companies in the Russell 3000 Index, which tracks the 3,000 largest U.S.-traded stocks by market value, according to advocacy group 50/50 Women on Boards.

Despite GM’s standout record on board diversity, the carmaker failed to make JUST Capital’s latest list of American companies leading the way for women in the workplace. JUST’s rankings track not only board gender diversity but also pay gaps, paid parental leave, backup dependent care, and paid time off or vacation policies. Of 928 companies surveyed, only five checked all the boxes: Bank of America, Etsy, General Mills, Hewlett-Packard and Starbucks.

E-commerce website Etsy came out on top. Women make up half of its board, and a third of its engineers are women, double the industry average. It offers generous paid parental leave and six months of paid leave for caregivers and adoptive parents. Those seven women on GM’s board clearly still have some work to do.

Zero: Chevron

Follow U.S. energy giant Chevron on Twitter and you’ll notice that it likes to portray itself as an ardent fighter for the environment. “Innovation is everything,” it trumpeted on April 5. “Find out how we’re investing in technologies that help address climate change.” Three days earlier, the company boasted about its support for a price on carbon.

Yet those tweets are a far cry from the way Chevron runs its business, judging by a groundbreaking complaint lodged with the U.S. Federal Trade Commission in March: Earthworks, Greenpeace and Global Witness accused the company of “greenwashing” – spending more time and money crowing about its environmentally friendly products and practices than doing the work to make them so.

The complaint marks the first time that activists have asked the FTC to apply its Green Guides against a fossil fuel company. The guides, first issued in 1992 and revised several times, seek to help marketers ensure that their claims are true and substantiated.

The groups allege that “for too long corporations like Chevron and other oil majors have taken advantage of loose or vague rules regarding advertising and other interactions with consumers, and our coalition seeks to hold them to account in order to ensure that they cannot lie to the public without consequence again.”

They cite a study by the Climate Accountability Institute, which identifies Chevron as the world’s second-biggest emitter of carbon dioxide, after oil giant Saudi Aramco. According to the study, Chevron and three other investor-owned companies – ExxonMobil, BP and Royal Dutch Shell – have spewed out more than 10% of all carbon emissions since 1965.

A 2019 report by InfluenceMap estimated that Chevron and four other publicly traded oil and gas producers spend almost US$200 million a year lobbying to delay, dilute or block government policies aimed at tackling climate change. As an example, the report cites Chevron and BP’s contributions to a campaign that successfully blocked the imposition of a carbon tax in Washington State.

Edward Collins, the report’s author, told The Guardian: “Oil majors’ climate branding sounds increasingly hollow and their credibility is on the line. They publicly support climate action while lobbying against binding policy. They advocate low-carbon solutions but such investments are dwarfed by spending on expanding their fossil fuel business.”

Chevron insists it is working with governments to design “balanced and transparent” policies that reduce GHGs and address environmental goals while ensuring that consumers have access to affordable, reliable and ever-cleaner energy. Now let’s see what the FTC says.

The post Heroes and Zeros: Etsy versus Chevron appeared first on Corporate Knights.

The official theme of this year’s International Women’s Day is Women in Leadership: Achieving an Equal Future in a COVID-19 World. In announcing the 2021 focus, UN Women pointed out that the countries that were most effective in curbing the health and socioeconomic impacts of COVID-19 are led by women. Yet women are heads of state and government in only 20 countries worldwide.

The lack of women in leadership is mirrored in the corporate sphere, where long tenures are slowing the influx of varied perspectives and skill sets among board directors. But a simple solution to the problem exists.

I recently completed an analysis of the boards of all public firms and the largest private firms in the U.S., dating back to 2000 and covering 4,000 to 5,000 firms each year. Prior to the financial crisis, women held only about 8% of director seats. Since then, the figure has increased to 19% on public boards in 2019, while little changed for private firms. Among public corporations, women constituted about 30% of new board members over the three most-recent years, but total gender diversification was slowed by two factors: first, some women left board positions as others joined, providing only a small gain; second, a significant number of corporate boards enacted a one-time expansion to make room for extra women directors. However, expansion isn’t a sustainable strategy for deeper diversification. Turnover is necessary to make way for more women and other diverse candidates.

While the study was limited to U.S. corporations, the principle holds true for established boards in any location: long board tenures slow the rate of diversification from contemporary candidate pools. In the U.S., the annual turnover rate for board directors between 2008 and 2019 was 8.9%. By comparison, the turnover rate for CEOs was 12.5%. More importantly, a significant proportion of the board directors have enjoyed extraordinarily long tenure. For example, nearly a quarter of directors held their seats for 10 years or more, and 8.5% held their seats for at least 20 years. Percentages of CEOs holding their positions after 10 and 20 years were 3% and 1%, respectively.

Even a board that does a terrific job diversifying new recruits can’t rely on natural turnover. If it does, rotation – and thus diversification – will happen at a glacial pace, causing numerous problems. As with government leadership related to COVID-19, corporations need diverse management perspectives on both crisis and non-crisis situations. In fact, previous research shows women directors contribute specific functional expertise that was previously missing from corporate boards.

Several European countries and California have legal mandates for increasing board diversity, and numerous public companies have board diversity goals as part of their corporate social responsibility (CSR) commitments. But simply nominating women to fill the few available seats does little to diversify the full board and may restrict a firm’s ability to represent other strategic needs on the board. A better solution is to focus on increasing director turnover, ensuring a consistent flow of available seats for diverse candidates with a range of contemporary skills and the knowledge necessary to innovate the business. Numerous studies have found that companies with greater diversity also demonstrate more innovation. If you want to understand the risk of not refreshing a board’s perspective, consider Blockbuster’s decision not to purchase Netflix, Kodak’s failure to embrace digital photography, and McGraw Hill’s foot-dragging on S&P Global before the spin-off. In all these cases, the board members were from an era when the “old” business model was successful, and they didn’t fully appreciate the disruptive forces of new technology.

Corporations can shift board culture away from long tenures by placing hard or soft caps on terms. This would neutralize any stigma that might currently be associated with directors who resign after just a few years. In France, independent directors lose their “independent” status after a set number of years, which is another way to encourage turnover via external pressure. Other rules could encourage turnover while leaving the door open to directors of particular, long-term value. For example, directors could be required to take a hiatus at the end of their terms but stand for re-election in future years. Or, they could stand for re-election at the end of their terms only if the board also nominates alternate candidates for the seat.

Regardless of the method, if we’re to release the bottleneck holding back women in leadership at the level of corporate boards, achieving regular turnover is the key.

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The four Canadian ETFs that focus exclusively on gender all launched within the span of a year, with Evolve Fund’s Evolve North American Gender Diversity Index ETF kicking things off in mid-2017. And soon after, Mackenzie Investments, RBC, and BMO Global Asset Management all launched gender-focused ETFs of their own, giving everyday investors access to stocks with more women in the leadership than most. RBC’s was the only fund to exclusively track Canadian companies.

As it stands, just 17.9% of women occupy board seats around the globe, as of late 2018. MSCI Inc., the global provider of equity, fixed income and hedge fund stock market indexes, predicts that it will take until 2029 to reach a worldwide average of 30% women on boards among MSCI All Country World Index (ACWI) companies. In Canada, the global non-profit Catalyst is striving for a much earlier date, asking all corporations to reach that goal by 2022.

Canadian companies are getting close, with a reported 27% of women on boards. But we’re still a long way off from true gender parity. Thanks to growing interest from investors (including gender-focused funds) companies are starting to pick up the pace on this issue, says Tanya van Biesen, executive director of Canadian operations at Catalyst. Diversity policies aren’t mandatory in Canada, but the Ontario Securities Commission’s “comply or explain” rule essentially requires companies listed on the TSX to disclose the number of women on their boards as well as their policy on diversity, or else explain why they don’t have one.

Catalyst is urging companies to see diversity and inclusion as a talent issue and essential to creating a productive, innovative and profitable workforce.

Top 25% of organizations that have gender diversity in their executive leadership teams beat out the industry average on profitability and value creation.

“If [companies] are looking for motivated, educated, and talented people, [women are] an obvious place to look,” van Biesen says.  “There have been many studies done to indicate that a gender diverse team generates better outcomes that relate to reputation, financial performance, productivity, innovation and risk management.”

Investors should take note: investing in companies with gender imbalances can cost you – the top 25% of organizations that have gender diversity in their executive leadership teams beat out the industry average on profitability and value creation, according to an oft-cited January 2018 report by management consulting firm McKinsey & Company, an organization dedicated to improving the performance of corporations.

For investors who want to make a difference with their money, several firms have launched Canadian ETF products dedicated to this cause. How do they stack up when it comes to women in leadership?

Mackenzie Global Leadership Impact ETF establishes itself as the clear winner when measuring board diversity — its holdings have an average of 34.7% of women sitting on its companies’ boards.

Other gender diversity metrics reveal that the fund’s holdings have 30% of women in senior management and 34% have a woman CEO or CFO, according to statistics based on holdings as of August 31, 2018.

Evolve North American Gender Diversity Index ETF fares the worst in this lineup when it comes to women on boards (26.8%). To be fair, the ETF is optimized for a range of gender equity criteria that goes beyond the number of female directors. It follows the Solactive Equileap North American Gender Equality Index, which scores companies on 19 different criteria, such as the gender balance of senior management, recruitment strategy, supplier diversity, and freedom from violence, abuse and sexual harassment.

Michael Simonetta, chairman of Toronto-based Evolve Funds Group Inc., says gender diversity should be measured across company culture, so it’s “not really a concern” if Evolve North American Gender Diversity Index ETF has a lower number in the women on boards category than competitive funds.

“You can have a board with 40% women, but if your policies are negative toward women in the workplace, how good is that from a gender balance perspective?” he asks . “It’s not.”

Fund Face-off

So, how well does the leading fund, Mackenzie Global Leadership Impact ETF (MWMN), hold up against one of the standard ETFs not pre-occupied with gender diversity?

The Mackenzie ETF trumps its benchmark (iShares MSCI World ETF) when it comes to promoting environmental, social and governance issues, with superior scores on average CEO-to-worker pay, gender diversity on boards, and its carbon footprint. Interestingly, the positive gender screen also results in more exposure to companies with products or services that benefit the environment, and less exposure to companies whose products or services have negative impacts like weapons and gambling stocks.

With regard to returns, the Mackenzie ETF is ahead of its iShares benchmark (XWD) on a year-to-date and one-year total return basis, but since its inception on December 3, 2017, it is behind with a 10.8% total return versus 12.5% for the benchmark.

Bottom line: the Mackenzie ETF offers investors significantly more gender diversity, a slightly better sustainability profile and comparable returns, beating its benchmark in two of the three time periods evaluated.

The post Fund face-off: How do gender-focused ETFs fare? appeared first on Corporate Knights.

Analysis by Corporate Knights with Thomson Reuters Datastream shows that the average age of a Global 100 company is 87 years, while the average age of companies in the MSCI All Country World Index (ACWI) is 63 years.

And the Global 100 index, which is equally-weighted and mirrors the industry composition of the MSCI ACWI on a percentage basis, outperforms the benchmark, says Corporate Knights CEO and editor-in-chief Toby Heaps. “From inception (February 1, 2005) to December 31, 2018, the Global 100 made a net investment return of 127.35%, compared to 118.27% for the MSCI ACWI,” he points out.

The Global 100 companies have better governance than their peers – they have a lower CEO-to-average-worker pay ratio than the ACWI (76:1 compared to 140:1), an important measure in an age of increasing income inequality and growing concern about it. They also pay more taxes, on average 18% of EBITDA compared to 16%. Companies perceived to be avoiding paying their fair share of taxes through financial engineering are coming under growing pressure from consumers, policymakers and regulators.

The Global 100 firms are greener, too – they have double the carbon productivity (weighted average of $238k in revenue per tonne of CO2e vs. $157k for the MSCI ACWI ETF); and derive much more of their revenues from clean (positive green or social impact) goods and services (26% of total revenues vs. 9%).

They also have more women on their boards (average 27% vs. 19% for the MSCI ACWI ETF); and are more likely, by some distance, to have a link between sustainability measures and executive pay (58% have a link against 19% for the ACWI).

A fifth of the list (20) are IT companies, with the financial sector the second biggest (17 companies), followed by consumer discretionary, health care and industrials. Collectively, these five sectors account for almost three quarters of the Global 100.

While the U.S. is the largest single country represented, with 22 companies, Europe accounts for just over half of the list (52). There are no companies from China or India.

The Global 100 methodology has seen further refinements this year, with all companies ranked against Corporate Knights Industry Group peers based on a modified FactSet taxonomy rather than, as previously, against GICS Industry peers, to allow for better “apples to apples” comparisons.

And this year, half of every company’s score is determined by its clean revenues. Last year, only a few sectors were ranked in this way – energy, utilities and financials – but a fleshed out taxonomy and more complete data now enables all sectors to be evaluated on this basis.

Winner Chr. Hansen is profiled in a separate article, but other stand-out companies include Banco do Brasil (#8), whose US$50 billion green loan book accounts for almost one third of its total loan book – far and away the highest percentage for any bank.

Mining group Teck Resources (#37), traditionally seen as a steel-making coal company, is reinvesting its profits to build up its copper and zinc units, both elements being crucial to the low carbon economy.
Neste (#3), an oil and gas refiner from Finland (one of seven Finnish companies in the index) now earns 25% of its annual US$11.7 billion in revenues from refining biofuels and aims to lift that to 50% by 2020. The company’s five-year return of 328% to September 2018 compares to 7.25% for the S&P Global Oil Index.

Click here to return to the 2019 Global 100 landing page.

The post The Global 100 difference appeared first on Corporate Knights.

Klapwyk is careful to ensure that everything on this farm is done sustainably, not just to keep the soil in balance but so she and her farm team can keep humming along healthily, too. She’s the co-owner here at Zocalo Organics, an 83-acre property dotted with greenhouses, veggie gardens, hayfields, cedar forests and wetlands in Hillsburgh, an hour and a half north west of Toronto. And at 27, she’s one of the nation’s youngest farm operators, part of a burgeoning movement of female agriculturists in their 20s and 30s seeking to work the land differently, sustainably, ecologically.

Like 68 per cent of farmers recently surveyed by the National New Farmer Coalition, neither Klapwyk nor her husband had grown up milking cows or driving tractors. Klapwyk’s father has an aluminum siding business near Guelph. It took some online crowd-funding, a half a million dollar Young Farmer Loan from Farm Credit Canada and some parental help, but in 2014, Klapwyk and her husband scraped enough funds together to purchase the land off a retiring organic farmer – for about the price that other young couples are spending on a semi-detached home in the city.

Now, only two seasons in and Zocalo is already bringing in more money than the farmer that owned the property for 25 years prior. Like many in this growing crop of new and young female farmers, she learned how to work the land for high-value direct-to-consumer food by volunteering, interning and cooping on farms throughout Canada and the Americas after university. Zocalo is now selling certified organic veggies to over a dozen area restaurants (including Five Diamond-rated Langdon Hall) and a Rowe Farms butcher shop, as well as 100 some-odd “shareholders” (households that pay up front for a season of weekly produce boxes).

It’s no secret that the farming industry needs this fresh blood. StatsCan says the sector’s seen a staggering decline of farmers under 40, plummeting 75 per cent from 1991 to 2011. The average Canadian farmer now looks something like this: male, 54 (and counting), and running ever larger consolidated farms. Though last checked, there were 80,605 female farm operators in Canada in 2011, when the last national farm census was published. That’s still just 27.4 per cent of all farm operators – up one per cent from the previous decade. But there is one notable sunny patch: organic farming. Nearly a third of organic operators were female (in British Columbia that number jumped to 40 per cent) and, proportionally, there are more farm operators under 40 in organics, too.

Factor in the surge of women dominating organic farm apprenticeships and post-secondary agriculture programs nationwide and you can almost feel the bell curve bending. At University of Guelph’s Agricultural College, there were nearly 1,400 female students to just under 640 men enrolled in 2013. At the University of Alberta, at least six in 10 of those in ag sciences are women, according to faculty dean Stan Blade.

“Clearly there’s going to be a transition to the next generation,” says Blade. “Anecdotally, we see that it might have been exclusively males a generation ago. That’s not going to be the case.”

Sara Dent, the B.C. coordinator for Young Agrarians, a network of new and young ecological and organic farmers, says, “There’s this demographic going through university and coming out wondering what they can do to make a difference in the world and how they can actively do something that mitigates climate change.” Klapwyk had her “organic farming is the answer” epiphany while studying international development. Many come to it after environmental studies programs.

This new wave of farmers may fall under census radars since many aren’t yet in Klapwyk’s position and don’t have a fixed address. Says Dent, “They’re working in a more temporary environment to get the training and experience that they need to potentially become owner-operators down the road.

Christie Young founded FarmStart in 2005 to help that new generation of ecological farmers get the experience and training they need. At least half the people coming through the organization’s programs are women. But without farm families and a whack of capital backing them, getting into supply-managed commodity farming can be a challenge, particularly when you may have to shell out millions for quota. So they start small, often working in cooperatives or on incubator farms that rent out plots of up to a couple acres, sharing tractors, tools and mentors for up to five-year leases before those businesses find more permanent homes.

“They don’t necessarily want to buy into or be part of a big corporate farm business, which is where most commodity and conventional agriculture is going,” says Young. “Doing it differently, they tend to adopt more sustainable practices … more direct-marketed and shorter supply chains. You can get a better price for those kinds of products that would then allow you to farm differently.”

Genevieve Grossenbacher, a Montreal-raised vegan baker-turned nonprofit food security advocate and organic grower herself says she’s a prime example. “I fit the profile of the new face of new farmers.” Grossenbacher and her partner, however, had extra geographical luck. They started running their community-supported agriculture (CSA) food box from an incubator farm in a province that supports CSAs and young farmers perhaps more than any other. If you’re under 39, Quebec’s FIRA (fonds d’investissement pour la relève agricole) will buy the land of your choice and rent it out to you until you can buy it back, within 15 years.

It’s no coincidence that Quebec has more farm operators under 40 than any other province, despite massive drops in that demographic over the past few decades. It’s getting creative about fostering the next generation of new farmers, especially since so few farm kids have been coming home to roost.

Lydia Ryall had no interest in taking over her parents’ large conventional greenhouse tomato operation in B.C. At 31, she now runs Cropthorne Farm, 17 acres of certified organic mixed vegetables, selling such heirloom varieties as watermelon radishes and lemon cucumbers to half a dozen trendy farm-to-table Vancouver restaurants, 180 CSAs and four Vancouver farmers’ markets. When she won B.C.’s Outstanding Young Farmer award two years ago, she was the first solo farmer awarded in 25 years and the first female to win who wasn’t jointly nominated with her husband, even though B.C. has more exclusively women-run farms than anywhere else in the country.

“It still has its challenges. There’s been times where I’ve been at a tractor dealership and … they think I’m buying a tractor for my dad. Sales guys are a little bit surprised at first.”

That being said, the paradigm is shifting and Cropthorne clearly isn’t bound by gender constraints of farms past. Her husband (a wildlife coordinator at Vancouver International Airport) is currently on parental leave looking after their infant daughter while she manages the fields. “It’s really interesting because we totally switched gender roles in one sense from the traditional way. Right now, anyway.”

Still, while more young women may rule the roost on many smaller ecological farms, a study by the Canadian Agricultural Human Resource Council (CAHRC) found that women continue to face a “grass ceiling” throughout Canada’s broader agricultural sector. Says CAHRC project manager Debra Hauer, “We are finding that, yes, there is that final step that is a barrier to achieving senior management or executive roles in all aspects of agriculture.”

Orgs like the CAHRC, the National New Farmer Coalition, Young Agrarians, Women in Ag and FarmStart are working on knocking down those barriers, be it lack of affordable farmland or access to capital for new female farmers, or helping them break into the old boys club in farm and ag-related businesses.

Even with so many farm fences in the way, adds FarmStart’s Young, “I do believe women are going to lead that renewal.”

The post A taste of country: the rise of young, female farmers appeared first on Corporate Knights.