A new report by MSCI says that there is a link between the diversity of companies’ boards and their ESG Rating.
The research finds that with social inequality gaining prominence ahead of the 2021 proxy season, investors and other stakeholders are increasingly vocal about the need for greater diversity in corporate boardrooms.
One-third of companies with strong, consistent female representation (at least 3 women directors who have served for at least 3 years) achieved leader status with their MSCI ESG Ratings, defined as ratings of AAA or AA. Less than 10% of these companies were ESG laggards (CCC or B). Among companies without strong board diversity, however, the percentage of ESG leaders dropped by half — to 16.2% — and the percentage of ESG laggards more than doubled, to 23.8%.