LGIM launches ‘GIRL’ fund to promote gender diversity

The newly launched L&G Future World Gender in Leadership UK Index Fund (‘GIRL’ fund) aims to invest in UK companies with the highest levels of gender diversity.

LGIM has created a proprietary index to rank over 350 UK companies across the FTSE 100 and FTSE 250. Companies will be scored according to four gender diversity measures: women on the board of directors, women executives, women in management and women in the workforce. Companies will be required to have a minimum threshold of 30% of women represented in each of these four measures to qualify for inclusion in the index.³

The recently introduced gender pay gap rules require companies with 250 or more employees to publish pay data reporting on salaries of women compared to men. LGIM will consider including this information as a fifth metric within the index, as more data is gathered following this ruling. ¹

Companies in the index are scored from zero to 100, with 100 indicating the most diverse and zero the least. The index reveals some interesting results. Engineering giant Melrose received a score of zero and has been excluded from the fund. On a more positive note, energy group, The Renewable Infrastructure Group (TRIG) was awarded a perfect score of 100 for high levels of gender diversity. ³

Improving gender diversity

Clare Payn, Head of Corporate Governance, North America at LGIM, says: “We have written to the lowest-scoring companies to explain to them how the funds work and offer engagement. We want to help them improve their score.” ¹

“LGIM has been active in the diversity debate since 2011, and has been voting against all male boards since 2015. We see this as a business issue. Tapping into the most diverse talent pool is vital in a competitive and changing market for companies to remain relevant. Boards made up of just men, from the same socioeconomic backgrounds, cannot be the best forum for challenging debates. The fund is a natural progression given the engagement we’ve been undertaking.” ²

Helena Morrissey , Head of Personal Investing at LGIM, says: “Gender inequality is one of the key issues of our time – and one that generates so much frustration. Rather than feeling trapped or despondent, let’s do something about it. I’m excited about the launch of the GIRL Fund, which empowers us all to use our money to help companies to progress. When we invest in the success of women, we are investing in the success of business. Collectively, we can help achieve gender equality and improve gender diversity in the UK.” ²

Whether L&G’s ‘GIRL’ fund achieves greater gender equality as intended and succeeds in improving gender diversity remains to be seen. One thing is for sure, gender diversity remains a hotly debated topic, with gender pay gap legislation causing many companies to rethink their policies.

This week, price comparison site, GoCompare announced plans to introduce blind CVs and female shortlists ahead of gender pay gap reporting requirements next year.

Source 1 – https://www.investmentweek.co.uk/investment-week/news/3032494/lgims-helena-morrissey-unveils-girl-fund-targetting-companies-with-high-gender-diversity
Source 2 – https://www.wealthadviser.co/2018/05/17/264347/lgim-launches-first-gender-diversity-fund-focused-uk-companies
Source 3 – http://citywire.co.uk/money/landg-launches-girl-fund-targeting-gender-diversity/a1120956
Source 4 https://www.insurancetimes.co.uk/1427188.article

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All figures correct as at 30.06.2019.