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Frequently Asked Questions
  Digital Transformation Catalyzes Diversity in Nasdaq Company Boardrooms
Identification Number 1454
Digital Transformation Catalyzes Diversity in Nasdaq Company Boardrooms
Publication Date: November 16, 2017 

"Every company is now a technology company, and boards increasingly require a new kind of director," says Coco Brown, founder and CEO of The Athena Alliance, an organization dedicated to preparing executive women for board service and facilitating board matches. A veteran of the Silicon Valley tech industry, Ms. Brown talked to Nasdaq about how digital transformation is disrupting traditional board composition and creating new opportunities for women to make meaningful contributions in the boardroom.

Despite increased pressure from investors, gender diversity on boards is improving at a glacial pace of just 1% per year. Why? Because boards are still accustomed to—and most comfortable with—appointing former and current CEOs and CFOs of large enterprises, and women comprise a very small percentage of those roles.

There is, however, an intriguing exception to the male majority in the boardroom: the gender composition of non-executive digital directors. Russell Reynolds has been tracking statistics on digital directors in the boardroom since 2013. Their most recent survey tracking digital directors appointed to the boards of the Global 300 uncovered encouraging trends:

  • 37% of Global 300 digital directors are women.
  • 58% of digital directors added to Global 300 boards between 2014-2016 were women.
  • Global 300 boards with a digital director have greater gender parity than traditional boards.
The advent of digital directors heralds a larger evolution taking place in the boardroom. Companies today face a wide range of threats and opportunities related to digital transformation, most of which didn't exist 10 years ago. These include cyber risk, technology innovations (including AI and machine learning), business model shifts, digital marketing, and brand management. The rapid pace of change has left traditional boards lacking in two fundamental areas:

Cognitive and relational diversity: Cognitive refers to diversity of thought, while relational diversity is the ability to relate to a company's constituents directly (customers, employees, and communities).

Modern digital competence on a mass scale: Any company that expects to be around 5-10 years from now will need to digitize supply chains, sales engines, business processes, and customer and employee engagement, if it hasn't already.

Savvy boards recognize that to stay competitive, they must address these deficits, and continuing to recruit board members from the ranks of former CEOs and CFOs is not the answer. It is becoming increasingly common for boards to "widen the aperture" beyond traditional executive roles to recruit non-executive directors who have engineering, technology, operations, human resources, and marketing backgrounds. As a result, a whole new generation of thought leaders is beginning to take seats at boardroom tables:

  • Human Resources Officers (CHRO, CPO): These are a company's workforce and culture experts and are under-represented in the boardroom. They also advise on compensation, succession planning, stock programs, and employee and community relations.

  • Digital Technology Officers (CIO, CISO, CTO, Chief Product Officer, Cyber Security): These experts are attuned to some of the biggest technology-related threats, challenges and opportunities of the next 3 - 5 years.

  • Digital Delivery & Operations Officers (Head of Business Strategy, CMO, COO, Chief Customer Officer, Chief Revenue Officer): These roles have a pulse on the industry, shifting business environments, and evolving business models; they also have connections that can make a big difference.
Recent data indicates that recruiting outside of the CEO/CFO realm and into other C-Suite roles in small to mid-cap companies, or even SVP/VP roles of mid to large cap companies may accelerate progress towards gender parity in the boardroom: Russell Reynolds reported that while the total number of female directors of Global 300 companies stands at just 19%, women represented 26% of all digital directors appointed to Global 300 company boards between 2014-2016.

A number of Nasdaq companies have recently "widened the aperture" in board refreshment, appointing women to help lead their digital transformation in the boardroom, including:

Axon Enterprise, Inc. (Nasdaq: AAXN): Julie Cullivan is CIO and Senior Vice President of Business Operations at ForeScout Technologies, Inc. (Nasdaq: FSCT). Axon can leverage Julie's extensive sales operations, IT, and cybersecurity expertise as the company transforms its product line through AI and cloud technologies.

Banner Corporation (Nasdaq: BANR): Merline Saintil is the head of operations of Intuit's (Nasdaq: INTU) product and technology group. Banner recruited Merline to bring information technology expertise to the financial company's board.

Forrester Research, Inc. (Nasdaq: FORR): Yvonne Wassenaar, former CIO of New Relic and current CEO of Airware, is described by Forrester as "a thought leader in cloud, big data analytics, and business digitization." Forrester tapped Yvonne for the board to help guide the company as it undergoes the digital transformation of its business.

MobileIron, Inc. (Nasdaq: MOBL): Jessica Denecour is CIO of Varian Medical Systems. MobileIron believes its shareholders will benefit from Jessica's expertise in using IT to positively influence business outcomes.

Morningstar, Inc. (Nasdaq: MORN): Caroline Tsay is a technology start-up founder and former online channel division vice president at Hewlett Packard Enterprise. Morningstar's investment services have moved from analog to digital technologies, and Caroline has the mix of leadership experience and information technology expertise that Morningstar's board needed.

Telenav, Inc. (Nasdaq: TNAV): Karen Francis DeGolia is on the board of AutoNation, the largest automotive retailer in the U.S., and Executive Chairman of AcademixDirect, a technology marketing company serving the education industry. She joined the board of Telenav last December and was recently named Lead Director, adding her extensive experience in the automotive industry and emerging mobility technologies to Telenav's board.

Another unexpected statistic came from the Russell Reynolds survey mentioned earlier: 78% of the Global 300 still has no digital representation on the board. As companies continue to awaken to the realization that they need digital innovation expertise and diversity of thought on the board, women will find opportunities in greater numbers to demonstrate value and relevancy in the boardroom.


Coco Brown is founder and CEO of the Athena Alliance, an organization dedicated to advancing diversity in the boardroom by preparing executive women for board service and facilitating board matches. Before founding the Athena Alliance, Brown served as the president and chief operating officer of Taos, an information technology consulting and services company based in San Jose, California. She is also the founder and CEO of Executive Kinections, a Silicon Valley consultancy that advises executive teams in strategic planning and organizational design.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Publication Date*: 11/16/2017 Identification Number: 1454 Mailto Link
Frequently Asked Questions
  Nasdaq Talks to . . . Express Scripts' CEO Tim Wentworth about Why He Believes Inclusion is the Soil in which Diversity can Flourish and Contribute to Competitive Success
Identification Number 1437
Nasdaq Talks to . . . Express Scripts' CEO Tim Wentworth about Why He Believes Inclusion is the Soil in which Diversity can Flourish and Contribute to Competitive Success
Publication Date: October 9, 2017

Express Scripts Holding Company (Nasdaq: ESRX) is a Nasdaq-100 company that believes "diversity and inclusion are the foundation on which success and growth are built." This company walks the talk, from the boardroom to the front lines of its workforce. The Express Scripts board is over 40% gender and ethnically diverse, while the company's 26,000-strong workforce is nearly 70% female and 40% minority. The average age of Express Scripts' workforce is 43 and over a third of its management personnel are under age 48.

Nasdaq spoke with Tim Wentworth, CEO of Express Scripts, to find out how the company built a culture based on holistic diversity and inclusivity, and nurtured it into a competitive advantage.

Q: Express Scripts states in its proxy that "broad-based diversity is an important attribute of a well-functioning board." Can you share how diversity contributes to the effectiveness of your board?

A: I'm one of the luckiest CEOs in America, I have a tremendous board that collectively understands and collaboratively analyzes the issues we face in a way they couldn't do if they weren't so diverse.

Many companies view diversity as a goal, rather than a byproduct of how you build the culture, how you run the company, and how you build a governance model. Express Scripts is focused on patients and operates within a very complex health-care system, so it was natural for us to recruit people to the board who represent a broad range of perspectives and come from different backgrounds. It was imperative to create an environment where those views are fully contributing to the mission of making us a better-governed and more effective company.

Express Scripts' commitment to diversity and inclusion starts at the very top of the company, and that is a very powerful dynamic for me as a CEO—and a powerful motivator of our employees.

Q: Express Scripts diversity and inclusion model extends to its workforce. How has Express Scripts achieved such a diverse workforce and why does the company view diversity in its workforce as a competitive advantage?

A: Our workforce deliberately reflects the patients we serve and Express Scripts has been very intentional about diversity for a long time. Diversity of race, gender, age and thought means we reflect our patients and clients and understand their individual needs much better. Our governance committee and our broader board have made diversity a priority. There is not a board meeting that I attend where we don't talk about the diversity of our workforce broadly—and our board specifically—and ask if we are doing enough.

Inclusion is the soil in which diversity can flourish and contribute to competitive success. We continually build programs and initiatives that support our demographically shifting workforce, which ensure we get the best from everybody who comes in the door. By engaging our employees in recognizing and legitimizing the differences that we all bring to work—and identifying how they make us a better company—we have created a workforce that is biased towards action.

Our inclusion model is based on three pillars: culture, engagement and leadership. We built six broad-based employee resource groups (ERGs) that have focused our cultural diversity initiatives and business strategies from the ground up. Every one of the ERGs has an executive sponsor. We have nearly 5,000 employees participating, which on a benchmark basis is very high for a company our size. More importantly, our employee-survey results tell us that members of these groups are the most engaged and the most likely to recommend us as a place to work.

Employees judge us by how we treat, engage with, and support that community. Our resource groups make employees feel better about the company they work for, and that's a very important byproduct of executing inclusion well.

Q: What can other Nasdaq companies learn from Express Scripts about the benefits of a culture of inclusion and diversity?

A: Diversity and inclusion create a culture of unity that benefits everybody. Employees feel part of something larger than themselves; they are no longer just members of a particular community or department, but part of a diverse and unified company from the board all the way to the entry-level of the workforce.

Our employees acknowledge that they work for a company where the words match the music—a company that is committed top to bottom to inclusion. This provides motivation that goes beyond a 3% pay increase.

The benefits of diversity extend to the fiduciary duty of every public company—creating value for shareholders. In Express Scripts' case, this means fulfilling our mission of putting medicine within reach.

Our shareholders can be confident that our board is seeking, and thoughtfully considering, input from across the entire organization in pursuit of that mission. Express Scripts' solid foundation of diversity and inclusion drives alignment around our broader mission, because our employees don't question whether they are included—they know their voices count.

Q: Many companies claim they have a hard time finding diverse candidates for board service. Can you share how Express Scripts overcame that obstacle?

A: There's no question that it's a challenge to diversify a board, but the real obstacle is ensuring the company is attractive to diverse talent in the first place. The goal should be recruiting talented leaders who represent diverse perspectives and come from diverse backgrounds.

Express Scripts' culture works for us when we are recruiting board members. When we were searching for a new board member a couple of years ago, our candidate pool included two extraordinary African-American leaders. These two individuals had unique and important skill sets related to Express Scripts' corporate mission. As a board, we quickly realized we had a chance to bring on two diverse and highly sought after board members, and after minimal discussion decided it wasn't an either/or proposition. The fact that both of these talented individuals were interested in us is indicative of the fact that they felt our culture and our board was going to be a welcoming place for them to contribute.

Kathy Mazzarella, who is the Chief Executive and President of Graybar Electric Co., is another example of a highly talented candidate who was attracted to our board. She's a tremendously strong leader with a great skill set. She saw in us what we see in ourselves – a diverse board that attracts strategic thinkers who can help solve healthcare's biggest challenges.

Q: How does the Express Scripts governance committee define "diverse slate of candidates" to a search firm?

A: It all starts with what your board needs from a skill-set standpoint. It's not sufficient to have a diverse board that doesn't have the right skill sets. All our board members bring complementary skill sets to achieving our business goals and growing value for our shareholders.

The challenge to our search firm was very simple: "These are the skill sets we need. Go find us diverse leaders who have those skills."

We don't mandate a ratio for the slate, beyond sharing our bias towards diversity. I'm not going to fire a search firm that can't bring me a 40% diverse slate if they can bring me one or two terrific diverse candidates we can consider based on the skills that we need on the board.

We also turn to our own board to add people, they know and have worked with, to the slate. An advantage of having a diverse board is that they are a great resource in finding and attracting other highly qualified and diverse candidates.

Q: What are your thoughts on why the diversity needle is moving slowly in corporate America?

A: For the most part corporate America has very good intentions, but a big part of the problem is limiting the talent pool to CEOs. As a sitting CEO myself, I'm not going to be on other company boards. I've got enough to do, right now.

Competition for qualified diverse candidates is increasing because board diversity is in the governance spotlight now. The board members we recently added had many other companies that would have loved to retain them, so we're very grateful that our mission and our culture attracted them.

Given that environment, companies are going to need to broaden the search aperture a bit—perhaps looking at CEOs recently retired, or executives who weren't CEOs but do have C-suite experience. Rick Palmore, for example, was General Counsel at General Mills, one of the most admired companies in America.

If companies expand their searches to SVP-level candidates who have CEO potential or broader leadership potential, they can find high-quality candidates who will benefit from the experience and bring important skills to the table. A talented division president who is diverse and has high potential would be a strong board member for many companies.

Q: If a company doesn't have a diverse board today, what is a first step in that direction?

A: Start with a very honest conversation about the true level of commitment to diversity and inclusion, and what the path is going to be to change the composition.

The path to board diversity isn't just bringing in a face, it's acknowledging that things need to evolve to allow leaders to be successful and contribute in a meaningful way. The board needs to ask honestly "Are we committed to creating an environment where a woman or a minority can be highly productive?"

That journey also starts with the employee base. Prospective board members are going to notice if a board doesn't match its aspirations with its own employee base. If the board is honest about its culture, and the culture of the company it is governing, the rest will follow naturally.

Q: How does a board that has no diversity convince a talented minority or female candidate to join them?

A: Have the courageous conversation around how you got to this point, and have the conviction to share that honest conversation with talented candidates. Focus on where you want to get to, set a course and be tenacious in achieving your goals. Talented, diverse board members are available. Make them available to your company.

Express Scripts Holding Company (Nasdaq: ESRX) is the largest independent pharmacy benefit manager in the United States and has been recognized by numerous organizations for their commitment to diversity and equality. Express Scripts scored 100% on both the Human Rights Campaign Foundation's 2017 Corporate Equality Index and the U.S. Business Leadership Network's 2017 Disability Equality Index. For the past two years, Express Scripts was also included in DiversityInc's 25 Noteworthy Companies.
Publication Date*: 10/9/2017 Identification Number: 1437 Mailto Link
Frequently Asked Questions
  Nasdaq-Listed Companies Moving the Needle on Diversity in the Boardroom
Identification Number 1421
Nasdaq-Listed Companies Moving the Needle on Diversity in the Boardroom
Publication Date: September 6, 2017 

The discussion on gender parity in the boardroom is evolving beyond equality as gender diversity is increasingly correlated with higher profitability—and Wall Street is taking notice. As Janice Ellig notes in her recent article "Fearless Girl—SHE is the future and the future is NOW," a number of index funds have launched that focus on corporations with gender diverse C-suites and boardrooms. These include State Street Global Advisors Gender Diversity Index ETF, Barclays Women in Leadership Total Return Index and Bloomberg's Gender-Equality Equity Index. These funds may offer further tangible evidence that companies with diverse boards outperform their peers.

Despite correlations between gender diversity and profitability, studies such as those commissioned by Equilar, Deloitte and McKinsey continue to indicate that gender diversity in the boardroom is improving only incrementally. Some institutional investors are losing patience with the slow progress and plan to use their proxy vote to spur corrective action: State Street Global Advisors (SSGA) and BlackRock both recently announced they are prepared to vote against directors of boards composed solely of men. While proxy advisory firms Glass Lewis and ISS don't currently make gender diversity a determining factor in voting recommendations, there are signs these firms may soon follow the lead of SSGA and BlackRock. ISS' annual Governance Principals Survey—which can foreshadow upcoming changes to voting polices—includes a question this year about gender diversity on boards and whether organizations should vote against directors of public company boards with no female representation.

We began tracking gender diversity statistics of Nasdaq-listed company boards last year to gauge their progress against the datasets included in the studies mentioned above, as smaller, newer corporations are often not included in studies. We continue to find evidence that there are many Nasdaq-listed companies moving the needle towards gender parity in the boardroom. In fact, Nasdaq currently boasts 46 companies with boards that are at least 40% female. These companies represent many different sectors of the market and a wide range of market capitalizations. By shifting the spotlight towards these companies instead of overall statistics, we can begin to fully appreciate the progress that Nasdaq companies have made.

Many other Nasdaq companies made progress toward gender parity over the past year, including 24 companies that improved boardroom gender diversity by at least 20%, and 33 Nasdaq companies added two or more new women to their boards. In fact, Nasdaq added two women to its own board in 2017, which now includes three women out of nine members.

diversity stats

Overall, smaller and newer publicly-traded companies continue to have less diverse boards than larger, more established companies. However, not all companies follow this trend: Mersana Therapeutics, Inc. (Nasdaq: MRSN), a $350 million biopharmaceutical company that started trading on Nasdaq less than two months ago, is a shining outlier with four women sitting on a six-seat board.

When considering progress in board diversity, it is also important to remember that gender diversity is not the only type of diversity. While gender is one of the easier categories to measure, diversity in ethnicity, age, background and geography are also critical when viewing board diversity from a holistic perspective. State Auto Financial Corporation (Nasdaq: STFC) does a great job of stressing both the gender and ethnic diversity of its board. State Auto Financial used their most recent proxy statement to celebrate a ten person board comprised of 50% female or ethnically diverse members, three women and two African Americans.

Age diversity in the boardroom is also important and although we hear less about it, diversity in any form can positively change the dynamics in the boardroom. While our data showed that the average age of a board member is 58.5 years and has not moved much in the past year, there are companies that boast age diverse boards, such as Famous Dave's of America, Inc. (Nasdaq: DAVE), with six out of eight board members under the age of 50, and TripAdvisor, Inc. (Nasdaq: TRIP), with 50% of board members under the age of 50.

Progress does not stop with adding one or two women to a corporate board. "The business case for gender parity has been made, and further progress toward that goal is going to depend on tone at the top," said Ellig. "The CEO, the board chair, and the nominating/governance chair at a company have to be intentional about adding women to boards, and intentional about opening the pool of candidates beyond the usual names and beyond the CEO position to find highly qualified women for board seats."

To recognize public companies that are leading the way in reaching gender parity, in November, Ellig and The Women's Forum of New York will hold their fourth biennial Breakfast of Corporate Champions, saluting F1000 and S&P 500 companies that have reached the 25%, 30%, and 40% mark and those that have already reached gender parity on their boards.


Read Fearless Girl—SHE is the Future and the Future is NOW >>

Watch Janice Ellig's CNBC interview discussing how companies can promote gender equality in the workplace and in the boardroom >>

Publication Date*: 9/6/2017 Identification Number: 1421 Mailto Link
Frequently Asked Questions
  Sustainable Business Practices, Transparency Land Nasdaq Companies at Top of 2017's "100 Best Corporate Citizens" Ranking
Identification Number 1409
Sustainable Business Practices, Transparency Land Nasdaq Companies at Top of 2017's "100 Best Corporate Citizens" Ranking
Publication Date: August 9, 2017

Corporate Responsibility (CR) magazine recently recognized the 100 Best Corporate Citizens, ranking Russell 1000 companies in seven categories including the environment, climate change, human rights, employee relations, corporate governance, philanthropy and financial performance. A number of Nasdaq-listed companies made CR's list, including Hasbro (Nasdaq: HAS), Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT), which took the top three spots.

Why are good ESG practices important, and what does it take to be one of the 100 Best Corporate Citizens? We spoke with Nasdaq's Global Head of Sustainability, Evan Harvey, to find out.

Q: What does it take for companies to successfully balance CSR and ESG objectives? Which part or parts of the ESG framework are most important?

A: We don't really use the term "Corporate Social Responsibility" or CSR to describe sustainability initiatives in public companies anymore. CSR tends to focus on community outreach, responsible citizenship, and other externally validated (and externally valuable) tactics. We take a broader view, looking inside and outside the organization at key Environmental, Social, and Governance (ESG) practices in order to fully understand sustainability—and CSR is just one part of ESG.

Most of the companies listed above share this view, and most would likely say that all of the related tasks are important. CSR would not adequately cover supply chain oversight (SCO), which is the process whereby a large multinational drives better, more responsible and transparent practices at all of the companies in their supplier universe and is essential, for instance, to Microsoft's sustainability leadership. CSR would also not illustrate the vigor and tenacity whereby Intel removed virtually all conflict minerals from their products. Your question suggests that balance is essential, and I agree, but I think it's more important to look at the big picture.

Q: While some view ESG disclosure around environmental metrics unnecessary, how do ESG leaders use social responsibility to differentiate themselves and create business opportunities?

A: I talk to a lot of executives at our listed companies, and I don't know any who still believe basic environmental disclosures are unnecessary. They may take issue with the cost or complexity of making these disclosures, but they don't believe the data itself holds no value for investors or other corporate stakeholders. The opportunities for companies that fully embrace ESG integration, management, and disclosure are well-documented and include lower investor turnover, higher investor returns, better staff recruitment and retention rates, a deeper and more nuanced risk management profile, and so on.

Q: Socially responsible investing has gained popularity over the last few years, with investors looking to invest in companies that are making positive social/environmental commitments. Can you discuss the current scope of this trend and talk about how businesses are committing to being leaders in this area?

A: There is $23 trillion in sustainability investment out there right now, and one in every five dollars in the U.S. investment space finds its way into a sustainable company or responsible product. And that trend is only growing: The UN Principles for Responsible Investment (PRI) now has over 1,300 signatories, including everyone from niche SRI firms to Blackrock and State Street. By virtue of their commitment to PRI, all of these institutions have pledged to seek out more sustainable targets and to be a more active and engaged owner when it comes to driving ESG excellence. I don't see any reason why an Investor Relations Officer would ignore such a lucrative audience.

Q: From an ESG perspective, what is it that makes Hasbro, Intel and Microsoft standout? What can other companies learn from them?

A: Intel and Microsoft have been incredibly proactive in ensuring responsible sourcing of their components. Since joining the Electronic Industry Citizenship Coalition, Intel has made amazing strides towards incorporating conflict-free minerals into their supply chain and Microsoft has enacted some of the highest standards for supply chain oversight in the industry. Similarly, Hasbro has taken steps to ensure 100% of their third-party manufacturing meets ethical sourcing requirements and even publishes a list of their third-party vendors and factories. These companies have taken the initiative to be leaders in their fields and have been recognized for doing so.

Q: Can you highlight some companies that did not make this list, but have interesting ESG initiatives?

A: Many Nasdaq-listed companies are already leading the way. CA Technologies (Nasdaq: CA) just partnered with One for All to create and deliver social engagement apps on mobile devices. Starbucks (Nasdaq: SBUX) covers college tuition costs for its employees. And there are many Nasdaq companies moving the needle on board diversity, including Hologic, Inc. (Nasdaq: HOLX), Navient Corporation (Nasdaq: NAVI) and more than a dozen other Nasdaq companies who have achieved gender parity on their boards.

In terms of the other Nasdaq-listed companies that were recognized on the list this year, Biogen Inc. (Nasdaq: BIIB) has committed to a 35% reduction in emissions across its entire supply chain. Marriott International (Nasdaq: MAR) established aggressive targets for opening women- and minority-owned hotels, as well as purchasing from women-owned businesses. Texas Instruments Incorporated (Nasdaq: TXN) has worked to ensure that its integrated circuit supply chain is conflict-mineral free.

Q: What role does Nasdaq play in global ESG initiatives? What does Nasdaq do to help its listed companies with respect to their ESG programs?

A: Nasdaq not only pursues internal objectives—employee donation matching, team volunteering, affinity groups, alternate work schedules—but it also works diligently with listed companies. We provide sustainability research, training and education free of charge to any of our listings. Our long-running sustainability webinar series has brought together thought leaders from business, government, and the investment community for a number of years. But we are probably best known for our advocacy on a global stage, within the exchange and financial markets community: researching ESG performance measures, representing corporate interests with the largest sustainability reporting frameworks, and advocating for more voluntary disclosure. Our ESG Reporting Guide for Europe was just published in March.

Click here to view the entire list of companies that made Corporate Responsibility Magazine's 2017 100 Best Corporate Citizens list >>

Evan Harvey is the Global Head of Sustainability for Nasdaq. He is responsible for all corporate sustainability, philanthropic, and volunteering efforts and works with public companies, institutional investors, advocacy groups, and other exchanges. He currently sits on the U.S. Network Board for the United Nation's Global Compact and the Advisory Board for the Sustainability Accounting Standards Board.
Publication Date*: 8/9/2017 Identification Number: 1409 Mailto Link
Frequently Asked Questions
  Board Members Must Open the Aperture Wider to Break the Silicon Ceiling by Betsy Atkins
Identification Number 1403
Board Members Must Open the Aperture Wider to Break the Silicon Ceiling by Betsy Atkins
Publication Date: July 20, 2017

Betsy Atkins, President and Chief Executive Officer at venture capital firm Baja Corp, is a veteran of 23 boards and 13 IPOs.

Changing any corporate culture is a challenge, but I've found bringing diversity to the tech industry is even trickier. Fast-growth "unicorn" companies can quickly outgrow their founding venture-based startup corporate governance and find themselves facing crises with too few adults in the boardroom.

Many reports assert women in technology industries still push against a silicon ceiling when it comes to career advancement and cultural issues. Research from the Society of Women Engineers found that 20% of today's engineering school graduates are women, yet just 11% continue working in the field. Women in IT leadership roles (such as chief information officers or technology vice presidents) are just 9% of the total, according to a recent survey from Harvey Nash and KPMG.

Today's board members should open the aperture wider in terms of their role. The days of a board's role being pure financial oversight was last millennium. This millennium, board members are expected to be an asset as well as an accelerant for the business. In my own experience, I've seen technology companies nurture diverse, inclusive cultures starting with a few one-on-one approaches from the boardroom.

Build internal career networks

At Volvo Car AB, where I serve on the board, we've launched a program where I regularly meet with senior and mid-level women executives on personal career development. We work with these women execs to build on their strengths, clarify their career aspirations, and offer advice on advancement. This is a new program, but it is already proving a success in energizing and motivating the paths of these current and future female leaders.

Group mentoring also harnesses networks and creates supportive environments where women managers and executives can brainstorm effective ways to promote diversity in the organization. According to a recent Harvard Business Review article about changing corporate culture, safe havens nurture cultural ecosystems that model what the organization can become in the future, while networks create coalitions that catalyze change.

Make mentoring personal

On the board of Schneider Electric, I make it a point to directly mentor one-on-one a number of women on the company's senior leadership team. I teach them to advocate for themselves, identify executives within their company who they can network with, build rapport with as their mentors and nurture those relationships into sponsorships.

Women in management may find it helpful to have someone in the boardroom take a personal interest in their career strategy and development. For example, at Uber, new board member Ariana Huffington is in an ideal position to put her mentoring and career savvy to work in helping rising women execs rebuild that company.

One key to a successful mentoring program is a regular ongoing coaching and support. In my experience, a good mentor/mentee match also requires synergy: a strong personal chemistry and an alignment of professional disciplines. I'm a passionate advocate of digital transformation and customer-centric processes, so I tend to mentor women executives who have roles and expertise in line with those disciplines.

Board members don't have to wait for CEOs to ask for mentoring of female executives. When I spot high potential women managers within the companies of the boards I sit on, I approach our CEOs and offer to help these women reach the next level in their leadership potential.

Go beyond mentoring to sponsorship

There is a big difference between mentoring—which is periodic advising and coaching—and sponsoring. Sponsors take a far more active role in helping individuals reach the next rungs in their careers. Women who are already senior managers or board members can kick mentoring up a notch by "sponsoring" women with high potential through career coaching, facilitating introductions to other executives and identifying and importantly, recommending them for new opportunities that will accelerate their careers.

Set a goal

According to the Harvey Nash/KPMG survey mentioned above, only 28% of small-cap companies have a formal diversity initiative in place, versus 72% of large-cap companies. For newer, smaller tech companies that are in hyper-growth survival mode, it's unlikely management will organically implement tactics that foster diversity of management. Hope is not a strategy.

If a company really wants to drive cultural change, a prescriptive diversity goal could be considered. That goal can be defined based on the values of the company, and may include gender diversity, ethnic diversity, age diversity, global diversity, etc.

Highly qualified female candidates ARE out there. I was the only woman on the board of HD Supply when I joined, and just three years later 23% of the board is female. I also sit on the board at Schneider Electric, where we set a goal of 40% gender parity on the board. Today Schneider Electric's board is composed of 38% women, so we have nearly achieved that goal in just 7 years. The Volvo board I sit on has 23% women. These companies all operate in industries traditionally thought of as "male-dominated," yet we were able to recruit highly qualified female board members without compromising one wit on the experience, talent and skillsets we were looking for.

Recognize when women make a difference

When I served as chair of the board's compensation committee at tech firm Polycom, we were active in the annual recognition event for sales staff. I noted that women were leaders in sales, making up less than 10% of the sales force yet 34% of our "President's Circle" top sales performers. Making an added effort to celebrate (and promote) this talent is crucial in sending the message that sales is not just a "guy thing" in the company.

The talents of women are a strategic asset to companies, and there is a growing body of research proving that firms who nurture and empower their gender diversity gain in revenues and stock performance. In any company, balance sheet results are always found downstream from company culture. When it comes to reshaping that culture to be welcoming to women, the boardroom is the ideal place to start.


Betsy Atkins serves as President and Chief Executive Officer at Baja Corp, a venture capital firm and is currently the Lead Director and Governance Chair at HD Supply. She is also on the board of directors of Schneider Electric, Cognizant and Volvo Car Corporation and served on the board of directors at Nasdaq LLC and at Clear Standards as CEO and Chairman.


The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Publication Date*: 7/20/2017 Identification Number: 1403 Mailto Link
Frequently Asked Questions
  Vell Report Encourages More Board Diversity in Small Tech Firms
Identification Number 1373
Vell Report Encourages More Board Diversity in Small Tech Firms
Publication Date: May 12, 2017

A new report conducted by Vell Executive Search took an inside look at how companies can improve diversity within the board room. The report, titled “Women Board Members in Tech Companies: Strategies for Building High Performing Diverse Boards,” examined 581 large public technology companies in the U.S. and Canada, and found that while many of these firms are embracing women on boards, there is still room for improvement, especially among smaller companies. The report found that while the technology industry has made strides in large firms, focus is needed on the entire sector, beyond those large companies, in order to gain balance on boards. Recommendations to help achieve diversity include extending succession planning timelines, providing internal training in governance matters, and assisting smaller companies to find diverse board members.

Read the Vell Executive Search Report>>
Publication Date*: 5/12/2017 Identification Number: 1373 Mailto Link
Frequently Asked Questions
  10 Nasdaq Companies in the Russell 3000 Reach Gender Parity in the Boardroom
Identification Number 1366
10 Nasdaq Companies in the Russell 3000 Reach Gender Parity in the Boardroom
Publication Date: May 3, 2017

The latest Equilar Gender Diversity Index, a quarterly study of female directors in the Russell 3000, found that 10 Nasdaq companies have reached gender parity in the boardroom: Ascena Retail Group, Avid Technology, Connecticut Water, Heska Corporation, Hologic, HSN, Navient, Select Comfort, Trevena, and Viacom. The report also showed signs of progress in addressing gender diversity, including the fact that 25% of new board members in the first quarter of 2017 were female.

Read the Equilar Report >>

Read Nasdaq’s interview with the CEO of Connecticut Water about the role board diversity plays in strengthening corporate governance and improving company performance >>
Publication Date*: 5/3/2017 Identification Number: 1366 Mailto Link
Frequently Asked Questions
  Women in Fortune 500 Board Rooms
Identification Number 1350
Women in Fortune 500 Board Rooms
Publication Date: April 10, 2017

Women represent roughly 20% of board members in Fortune 500 companies, compared to just 11.2 percent in the late 1990’s. While this increase has been positive, a recent Bloomberg article asked what kind of roles and responsibilities women are now getting on board committees? The article suggests several possibilities for why women have been underrepresented as chairs of major committees, including that certain committees with a high percentage of woman chairs may become more important over time and women may chair committees that focus on areas where their skill sets better fit. The article notes that in major decision-making committees, diversity of knowledge, skill, and demographics may translate into more favorable outcomes. While it is unclear exactly why women are still underrepresented in board rooms, the article reminds readers that less diverse firms have been noted to have more governance-related controversies.

Read more from Bloomberg >>
Publication Date*: 4/10/2017 Identification Number: 1350 Mailto Link
Frequently Asked Questions
  Nasdaq Talks to...CA Technologies about How to Build an Effective Sustainability Program
Identification Number 1337
Nasdaq Talks to...CA Technologies about How to Build an Effective Sustainability Program
Publication Date: March 13, 2017

This article is the second in a series that spotlight Nasdaq-listed companies successfully tackling corporate governance challenges.

As competition for natural resources and skilled labor heats up in an increasingly globalized economy, investors and publicly-traded companies alike are focusing on environmental, social and governance matters. With this focus in mind, CA Technologies (Nasdaq: CA), a global leader in software solutions, enthusiastically subscribes to the "triple bottom line" mentality, concentrating not just on profits, but also on people and the planet. A member of the Dow Jones Sustainability Index since 2011, CA is consistently recognized as a leader in sustainability, ranking in the top 100 of Newsweek's Green Rankings, one of the world's most recognized assessments of corporate environmental performance.

Nasdaq recently spoke with Andy Wu and Jillian Lennartz of CA Technologies' Corporate Social Responsibility team to find out why the triple bottom line matters, how companies can develop a CSR program that's right for their organization, and how CA successfully integrates sustainability throughout their business.

Why the Triple Bottom Line Matters

CA recognizes that we operate in a global economy, and organizations are constrained within the larger context of resources available in people, in society at large, and the planet. The impetus for CA adopting a triple bottom line approach was a desire to conduct business in a socially responsible and environmentally conscious manner, because when people flourish and the environment flourishes, we flourish as well.

Toward that end, the company took a systems approach in analyzing what enables success for our business. We looked beyond our core products, services and workforce to examine where and how we interconnect with society and the environment. Sustainability doesn't have to come at the expense of profitability: by serving the communities that we live in and improving the efficiency of how we operate in the environment, CA Technologies believes it can create opportunities to innovate and grow our business.

From an investor standpoint, it's about the communities that we serve and how we operate in the environment in which we live and then how we can give back to the community. For example, we partner with Springboard Enterprises and the Anita Borg Institute to encourage girls and women to pursue careers in technology; with 100Kin10, an organization uniting the nation's top academic institutions, nonprofits, foundations, companies, and government agencies to train and retain excellent STEM teachers; and with Pratham, an organization that helps improve the quality of education in India.

How to Develop the Right Corporate Social Responsibility Program for Your Organization

1. Conduct a materiality assessment. This is critical to understanding the key issues within your organization and your industry. If a full materiality assessment isn't feasible for your company, you can benchmark against competitors and other companies within your industry to see what issues they're focused on from a sustainability standpoint.

Another option is using the Sustainable Development Goals (SDG) Compass as a guide to help narrow down the vast number of sustainability topics. This comprehensive document is presented by the U.N. Global Compact to help companies find the most relevant links between their business strategies and the SDGs.

At CA, our program was designed on the fundamental premise that you can't manage what you don't measure. Our program started when CA first reported to the CDP (formerly Carbon Disclosure Project) in 2006. At that stage, we were identifying what exactly our sustainability issues were, understanding our impacts, and building the processes necessary to collect and analyze the data regarding those impacts. We then set targets and goals to resolve the impacts we had identified and baselined.

As our program evolved over the past decade, CA Technologies began designing its software products with sustainability built into them, which helped us reduce our own carbon footprint by over 35% percent (or 33,974 metric tons of CO2) and reach our greenhouse gas reduction target four years ahead of our 2020 goal.

2. Align potential sustainability issues with your company's business needs. There should always be a business case for sustainability efforts, even if a company is starting a sustainability program due to external pressures from activists or business partners. The SDG Compass has an iterative process built into it to help identity those potential issues that align most closely with your business needs.

For example, CA Technologies operates in the technology sector, so it wouldn't make sense for us to focus directly on food or agriculture related sustainability issues because it's not in line with our core business. We focus on the internal and external social and environmental impacts that will help our business—and the industries we operate in—grow.

As our sustainability program has matured, we've really hit a resonance frequency because we've aligned our giving practices, our social work, and our environmental goals with our industry expertise. Everything that we're doing with regards to sustainability reflects back to a business need. For example, we're aligning our energy goals, not because we're an energy intensive company, but because we operate in an energy intensive industry that very much relies on energy continuity: for the internet to run, for software to run, for electronics to run. We have a vested interest in the sustainability of energy and the security of our energy infrastructure going forward. To this end, we're now looking at our renewable energy portfolio to determine options for building that out through direct purchases and renewable energy certificates. We're starting to look internationally as well, exploring where the infrastructure is in place to purchase renewable energy.

3. Embed sustainability into the culture of your organization. CA Technologies' sustainability program has been a success because it's a core value of our corporate culture. We employed a top down and a bottom up approach to sustainability implementation. It's not one way or the other but rather approaching it from both ends of the spectrum that is critical. You can only get so far if you do not weave it into the fabric of the organization and have that top down support.

Our Corporate Governance Committee plays an important role in governing our sustainability program at the board level, and includes a diverse group of folks from a gender standpoint but also from an experience and expertise standpoint. At the mid-level, CA Technologies' Corporate Social Responsibility team works in collaboration with the Corporate Governance Committee and upper management to develop and implement fiscal year sustainability plans, as well as identify goals and targets for the long-term. At the grass roots workforce level, we also have Green Teams, which are employee-led groups that volunteer their time to manage local office-greening activities. As our sustainability program matures, we are exploring how to expand employee engagement within the framework of our Green Teams to include philanthropic and social initiatives as well.

Andy Wu is a Principal at CA Technologies in the Corporate Social Responsibility group where he co-leads the sustainability strategy and initiatives for the company. He heads the CA's annual sustainability report and Dow Jones Sustainability Index submission.

Jillian Lennartz is a Principal at CA Technologies in the Corporate Social Responsibility group, and an honoree of the 2016 GreenBiz 30 Under 30 Sustainability Professionals list. She co-leads CA's sustainability strategy and initiatives, and manages the company's carbon accounting and reporting.

To learn more about how CA Technologies is improving the sustainability of the planet, its business and the communities it serves, visit us on the web 

Read CA Technologies 2016 Sustainability Report – Executive Summary here >>
Publication Date*: 3/13/2017 Identification Number: 1337 Mailto Link
Frequently Asked Questions
  Seven Steps to Implementing Board Oversight of Sustainability by Sandra E. Taylor
Identification Number 1324
Seven Steps to Implementing Board Oversight of Sustainability by Sandra E. Taylor
Publication Date: February 21, 2017

Sandra Taylor is the CEO of Sustainable Business International LLC and a pioneer in the field of sustainability. She has helped many major brands including Starbucks and Eastman Kodak, develop and implement global corporate social responsibility strategies.

Many corporate CEOs and investors have accepted the premise that sustainability issues are material to the long-term success of any business. Effective management of social and environmental risks can improve business performance and produce tangible results. These can include more reliable availability of essential natural resources, significant efficiency gains, reduced transaction costs and access to new capital. The concept of sustainable business seeks to combine environmental and social improvements with financial success.

Investors are increasingly focusing on the role that corporate boards play in overseeing material sustainability issues as a part of their fiduciary responsibility. Between 2010 and 2014, over 250 shareholder resolutions were filed calling for explicit board oversight of sustainability issues. During 2016 alone, 370 proposals were filed related to environmental and social issues, making sustainability the “fastest growing cause for shareholders.” Now is the time for boards of directors to protect and promote shareholder interests by adopting and overseeing a corporate sustainability strategy.

Integration of sustainability into key business initiatives, risk management and compliance are all consistent with corporate governance standards. Here are seven key areas when implementing board oversight of corporate sustainability efforts:

1. Start at the beginning and determine materiality.

As a starting point, boards should define what sustainability means for the company by conducting a materiality assessment. The risks posed and opportunities created by the shift towards greater sustainability present companies with complex, multi-dimensional, and sometimes interconnected issues. By developing a robust understanding of what issues are material to their operations, the environment and communities, companies can better prevent or mitigate these risks and gain access to these opportunities.

However, materiality in the sustainability context is not simply about reporting or disclosure. The materiality determination should reflect the organization’s significant economic, environmental and social impacts, and stretch far beyond just the production of a sustainability report: it should also touch on the company’s overall strategy, risk management, relationships, communications and even the design of products and services with sustainability impacts in mind.

Just as the board oversees or approves sales and financial targets, it should also approve targets (both long-term and short-term) for the company’s sustainability performance that can attain the same level of value and influence as other key elements of business performance by driving profitability, innovation and engagement.

In terms of sustainability reporting, there remain questions regarding whether sustainability report issuers, and investors as report users, identify the same topics as material. SASB is an effort to bridge that gap. SASB standards are designed to determine those environmental, social, and governance topics that are reasonably likely to have material impacts on the financial condition or operating performance of a company. SASB is able to identify and standardize disclosure for the sustainability topics that are most important to investors—those that are reasonably likely to have material impacts on companies in an industry.

2. Focus on the supply chain.

Of all the strategies, integrating sustainability into the supply chain and ethical sourcing may be the most critical. Ethical sourcing means ensuring that the products being sourced are created in safe facilities or under safe conditions for workers who are treated well and paid fair wages to work legal hours. It also means that the supplier respects the environment during the production and manufacture of the products.

3. Be innovative.

Rather than approving projects and then asking how the product, feature or service can be developed and delivered more sustainably, the board should add a sustainability lens (through scorecards, lifecycle analysis and indices) at decision-making points, ensuring sustainability is factored in before any go/no-go decision. The board should ensure that environmental sustainability and social responsibility values become important screens that are included in the company’s most senior hiring decisions and enterprise risk management framework, and considered when approving major decisions like capital projects, new business lines, mergers and acquisitions, new product launches and expansion into new geographic markets.

4. Be the impetus.

Through their core duties related to setting strategic course, audit and monitoring, and their long-term perspective, boards are uniquely positioned to ensure the full integration of sustainability into business strategy and practices. Integration means incorporating sustainability into the business strategy so that the business model itself creates social and environmental value in addition to financial value. In other words, by the very act of succeeding as a business, a company creates greater value for society and the environment.

Boards and senior management should ensure that corporate responsibility and sustainability are embedded into every part of the business, including planning, strategy, operations, marketing and human resources. Board compensation committees should incorporate sustainability priorities into both the recruitment and remuneration of executives and identify the most relevant and stretch targets to influence executive performance. A simple way to achieve this is to appoint a Chief Sustainability Officer (CSO) for the company who is part of the senior executive team and involved in all decision-making in much the same way as the General Counsel and Senior HR executive, including regular interaction with board committees.

5. Measure outcomes.

Once the company develops a sustainability strategy and policy, it then must identify major performance aspects, establish objectives, select specific indicators and metrics, and commit to achieving specific targets. Ideally, progress should be benchmarked against a set of time-bound, measureable goals laid out as part of the overarching strategy and publicly disclosed. For example, management systems should measure progress and provide assurances that the sourcing strategy a company pursues is delivering the intended results.

It is critical for the board to track performance, oversee reporting and set clear expectations for improving performance. Establish internal performance, communication, incentive and measurement systems for all sustainability goals and conduct quarterly business reviews. Boards should also set short and long-term sustainability targets — just as they do for financial targets — and ensure that the company’s sustainability strategy and performance are communicated at annual meetings and investor roadshows.

6. Be transparent.

Transparency is about reliable indicators of sustainability progress and honest communication with various stakeholders about policies, practices and progress, including formal external reporting. Whether an organization chooses a full-scale corporate responsibility report, following Global Reporting Initiative (GRI) guidelines, delivers a CSR report directed at consumers and community groups, or simply communicates progress on its website, external communication is critical to gaining consumer trust.

Reporting plays a pivotal role in communicating these management actions to a variety of stakeholders. Boards should review and approve disclosure of the company’s sustainability performance in mandatory and voluntary reporting. GRI Sustainability Reporting Standards are the world’s most trusted and widely used standards on sustainability reporting.

7. Align board structure and composition.

In a UN Global Compact-Accenture CEO study in 2010, 75% of CEOs reported that their board of directors take an active role in overseeing sustainability issues. However, when Ceres analyzed 613 of the largest publicly-traded U.S. companies in 2014, only 32% oversaw sustainability at the board level. Some notable international companies have established a stand-alone sustainability committee of the board, including Ford, Roche, Nike, Lockheed Martin, Monsanto, McDonalds, Coca-Cola and HSBC.

Board oversight can take several forms. In some companies the role is combined with the governance committee. This combined committee supervises compliance of internal business principles and principles of behavior with respect to legal as well as safety and environmental matters, diversity and also oversees the preparation of the sustainability report.

The type of committee is less important than the scope and ambition of its mandate, which should include company-wide oversight on issues such as climate change, human rights, sustainable supply chain management, health and safety, as well as sustainable products and services. Nike provides board members with regular training and education on key sustainability issues. This education promotes a more strategic, long-term approach to the board’s overall assessment of the company’s business performance.

Companies should actively seek to recruit directors with relevant knowledge and expertise – including executives from corporations with a sustainability track record or topical experts coming from specialized positions in business. Ceres found that only 19 percent of directors serving on board sustainability committees of large U.S. companies have discernible expertise in relevant issues. Even if there is just one board member with relevant expertise, he or she may be able to significantly improve the quality of the board’s deliberations and, over time, improve the understanding of sustainability among other directors.

Sustainability is a proxy for good governance. Shareholders and other stakeholders look to board engagement as an indication that sustainability risks and opportunities are adequately dealt with at the highest level.

Sandra E. Taylor is the CEO of Sustainable Business International LLC and served on the Sustainability Committee of DE Master Blenders NV of the Netherlands and the Compensation Committee of Capella Education Company. Sandra previously served as the senior vice president of corporate social responsibility for Starbucks Coffee Company and the vice president and director of public affairs for Eastman Kodak Company.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.
Publication Date*: 2/21/2017 Identification Number: 1324 Mailto Link
Frequently Asked Questions
  Sustainability Meets Integrity By John H. Stout
Identification Number 1307
Sustainability Meets Integrity By John H. Stout
Publication Date: January 18, 2017 

 John H. Stout is a partner at Fredrikson & Byron in Minneapolis where he Co-Chairs the Corporate Governance Group and Chairs the Business Sustainability and Social Responsibility Group.

“Business sustainability” has become an important addition to board/management discussions in recent years. While the term “sustainability” has long had environmental implications, sustainability has become an umbrella for many topics, including agriculture, food, deforestation, energy resources, various human rights issues, carbon and other emissions comprising a global concern for meeting society’s current interests and needs in a manner which does not compromise the interests and needs of future generations and is protective of the planet. “Business sustainability” focuses on a company’s ability to conduct its activities and build shareholder value over the long term, balancing the need for short-term results while adapting business strategies and operations to assure long-term value creation consistent with sustainable business practices. Inherent in meeting these challenges, companies are required by law to maintain a culture that embraces ethical values and legal compliance.

Issues with corporate conduct have been with us since corporations became a recognized means of amassing capital for a business activities while at the same time limiting the risk of those who provided the capital and conducted the business activities. However, in the late 1900s and early 2000s, from Enron to the present day, the challenges of business misconduct, and failures of business integrity, have attracted the media, the courts, regulators, and lawmakers. Sarbanes Oxley was passed in the wake of Enron and the many corporate failures occurring at that time. Dodd Frank was passed following the financial crisis precipitated by widespread misconduct in the financial services industry. Currently, as we experience the misconduct of Volkswagen and Wells Fargo, it is clear that the promotion of corporate integrity defies legislative and regulatory solutions. What’s needed is a redoubling of board and management initiatives to focus on achieving a high standard of corporate integrity on which a company’s shareholders and many other stakeholders can safely rely.

Integrity is the foundation on which sustainable businesses must be built. Without integrity as the fundamental principle, there can be no sustainable business, there will be no culture of ethics and legal compliance. What shareholders and other stakeholders most need from boards of directors, as the governing bodies of the companies serve, is the assurance of their companies’ integrity. Specifically:

  • That the company has a clear business mission and values formed on balancing short-term performance with long-term enterprise sustainability, adaptability, viability, and performance.

  • That the company’s business model is sustainable and that the long- and short term risks and opportunities which accompany that model have been carefully vetted by the board, and that its strategic plans, operating plans, and business conduct embrace the governance, ethics, environmental, energy, and social practices essential to long- and short-term value creation and performance.

  • That the company’s financial and nonfinancial reporting has integrity, and can be clearly understood and relied on by those responsible for assessing, financing, working for, and doing business with the company.

  • That the company’s public disclosures and the comments of senior management and the board have integrity and are reflective of the true state of the company’s values, business activities, and financial and nonfinancial results.

  • That the company’s CEO, selected, compensated, and regularly evaluated by the board, and the senior management team engaged by that CEO, would above all of their responsibilities, see that the company’s affairs are conducted in a manner which serves rather than detracts from, the company’s integrity and reputation.

  • That the compensation and perks awarded to board members and senior management, which directors alone approve, will not in actuality or perception, corrupt their judgment, compromise their independence, corrupt the company’s culture, or otherwise detract from the company’s integrity and reputation.

  • That the company’s compensation and incentive plans for non-management employees and those doing business with the company will promote rather than corrupt ethical conduct on the part of all employees, suppliers, and customers.
  • That directors and management will avoid actual or perceived conflicts of interest which would detract from the integrity of the company and its governance.

  • That management has in place compliance systems and procedures that will provide warnings of activities that would threaten the integrity and sustainability of the company, proactively overseen by the board, and when warnings come that management and the board will investigate the issues fully, independently, and without compromising restrictions, use the results to transparently address issues and needed corrections.

The bottom line of a sustainable governance system and sustainable business conduct, is that the company’s ultimate authority, i.e. its board of directors, is proactive and vigorous in taking responsibility for the company’s integrity. From Enron to Volkswagen and now Wells Fargo, many of the corporate scandals occurred because boards failed to take responsibility for the company’s integrity, long-term value creation, and ultimate sustainability. The directors apparently did not see the company’s integrity as an extension of their own, and ultimately this is a critical point.

Given that boards are responsible for overseeing and assuring the development and maintenance of a culture of integrity, ethics, and legal compliance they must be proactive in the use of the tools at their disposal for this challenging task. Key among these tools are:

  • Recommending the election of capable directors, persons known for their integrity, ethics, commitment to legal compliance, and understand that these are critical elements of a sustainable company; persons who understand what it means to be a fiduciary and their fiduciary duties; persons who are knowledgeable about governance and oversight and possess the skills, time, energy, judgment, leadership, and courage to effectively discharge their responsibilities. Everything starts with board composition.

  • Periodically refreshing the board with directors having a variety of skillsets, including an awareness of contemporary subjects applicable to the company, its shareholders and other stakeholders such as cyber risk, social media usage, and business sustainability and social responsibility.

  • Selection of independent board leadership with the knowledge and skills to assist the board in meeting its responsibilities.

  • Selection, compensation, and evaluation of a CEO known to be ethical, and screened for past integrity, legal and ethical issues, who is experienced and committed to building and maintaining a corporate culture of integrity, ethics, and legal compliance, and has demonstrated an ability to balance short- and long-term value creation and performance.

  • Periodic independent assessment of the company’s culture, ethics, values, compliance with laws and regulations, and effectiveness of training programs designed to instill appropriate corporate values, familiarize employees with the company’s expectations as to ethics, compliance, and integrity, as well as systems designed to test the effectiveness of those training programs.

  • Recognizing that in every company there is an enterprise-wide culture and many subcultures, including the boardroom culture, the board/management culture, and cultures within subsidiaries, divisions, and workgroups. It is important to harmonize these cultures with the overall enterprise culture and values and to assess the degree to which that has occurred.

  • Periodic one-on-one interaction with key senior executives and mid-level managers, internal and external auditors, compliance personnel (particularly those responsible for company hotlines and complaint gathering systems), key group and division leaders, internal and external legal counsel, and the executive in charge of human resources, to gain insight into the company’s culture, and the elements of integrity, ethics, and legal compliance.

  • Assurance that management has in place processes and procedures for preventing and detecting integrity lapses, ethical issues, and violations of laws, regulations, company governing documents, including codes of conduct and other company policies, and for assessing risk and risk mitigation followed up with oversight over, and periodic assessment of, the efficacy of those processes and procedures.

  • Oversight over the evaluation, hiring, firing, and compensation of employees who are key to assessing, shaping, and managing the corporation’s financial reporting, legal resources, human resources, risk assessment, ethical and legal compliance environment (e.g., the CFO, controller, internal auditor, risk manager, investment relations officer, internal counsel, heads of human resources and information technology/security, and person in charge of sustainability matters). Periodic one-on-one interviews with these individuals are an essential board/committee assessment and oversight tool.

  • Engagement by the board of independent auditors and compensation consultants, as well as oversight over management’s engagement of outside legal counsel and other key advisors to assure that the loyalty of these advisors is to the company, the board and not primarily to the personnel of the company who engaged them, and confirming that they recognize their responsibilities to the board and its committees and their roles in enhancing the effectiveness of the board and its committees.

  • Periodic engagement of independent third parties to advise the board and its committees on matters with respect to which the board requires a “second opinion” or advice from a source which is not regularly engaged to serve the company under management’s direction.
  • Use of tools such as business intelligence and balanced score carding to assist with monitoring the company’s operations.
  • Use of corporate and outside investigatory and research resources to scan the backgrounds of key people and companies which the company is engaging directly or as outside vendors.

  • Engagement with management in vigorous, candid dialogue regarding strategy, opportunities, operations, sustainability issues and risks, and rewards associated with the same, and seeking dialogue with various management personnel regarding concerns about corporate direction.

  • Constantly seeking to understand risks, paying attention to warnings, and confronting problems promptly and forthrightly. Policies and procedures for assessing and monitoring risks are essential and directors must assure that they are in place and functioning well. Warnings need to be heeded and promptly investigated. Investigation means a thorough effort to obtain all relevant information using independent resources where necessary to assure objectivity. History, including Volkswagen and Wells Fargo, provides ample lessons of the disastrous consequences of cover-ups and understanding financial and nonfinancial impact once a problem is discovered.

  • Monitoring the company’s public disclosures and management comments for integrity and reputational impact, as well as credible third party commentary regarding the company, its goods and services, the performance of and conduct of its key people, and its reputation for business conduct and integrity.
  • That the public disclosures by the company, and comments of senior management and the board regarding material company affairs have integrity.

Key to markets for talent, goods and services, investment, financings, corporate transactions, and ultimately the sustainability and long-term value creation of companies, is the integrity of the company, the goods and services it produces, and the information it provides, and the people it employs. Serious lapses in corporate integrity have resulted in substantial, sometimes tragic, financial and nonfinancial consequences for employees, vendors, customers, financing parties, shareholders, and other stakeholders. Boards must redouble their efforts to assure the integrity of the companies they govern. Ultimately, the sustainability of our free enterprise system depends on it.


This article originally appeared in the December 2016 edition of Business Law Today, a publication of the Business Law Section of the American Bar Association.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Publication Date*: 1/18/2017 Identification Number: 1307 Mailto Link
Frequently Asked Questions
  It’s Time for Companies to Improve Board Diversity Disclosure
Identification Number 1304
It’s Time for Companies to Improve Board Diversity Disclosure
Publication Date: January 12, 2017

In this post on the National Association of Corporate Directors’ Board Leader’s Blog, Nasdaq highlights its research, which indicates that many companies have a compelling story to tell about their board composition and diversity of age, gender, race, and skill sets. As companies prepare for the upcoming proxy season, Nasdaq encourages them to consider some simple disclosure enhancements that will increase the transparency around their diversity, including disclosing not only a board member’s gender and age, but also their ethnicity, skills, and experience.

Publication Date*: 1/12/2017 Identification Number: 1304 Mailto Link
Frequently Asked Questions
  Nasdaq Talks to . . . Eric Thornburg, CEO of Connecticut Water Service, about the Role Board Diversity Plays in Strengthening Corporate Governance and Improving Company Performance
Identification Number 1289
Nasdaq Talks to . . . Eric Thornburg, CEO of Connecticut Water Service, about the Role Board Diversity Plays in Strengthening Corporate Governance and Improving Company Performance
Publication Date: November 29, 2016

This article is the first in a series that spotlight Nasdaq-listed companies successfully tackling corporate governance challenges.

While the progress thus far towards achieving gender parity on public company boards may seem slow, we took a closer look at the data after this most recent proxy season and found shining examples of companies making significant progress towards gender parity. Connecticut Water Service, Inc. (CTWS) is one such company. With a board of directors that includes five women among its eight members, it is one of only 14 Nasdaq companies that has reached or exceeded 50-50 gender parity on its board.

Nasdaq recently spoke with Eric Thornburg, CEO of Connecticut Water Service, Inc., and asked him to share his thoughts on how a diverse culture contributes to the overall success of the organization and how gender parity has strengthened corporate governance and improved company performance.

Q: Why has your company, a public utility led by a male CEO, nonetheless, been so successful at finding and retaining qualified female directors when many companies are struggling to tap into this same talent pool?

A: It really came about by first putting forth our core values and our stewardship responsibilities as a drinking water utility. Achieving gender parity wasn’t a goal that we set out to achieve. Rather the goal was about building a culture on the board to drive the success of the organization—not just financially, but also from a customer satisfaction and employee engagement standpoint. We also wanted the culture to support our commitment to environmental sustainability.

While it was important to look for directors who had the necessary business skills, it was also important that we find the right people to help us build on that culture. And what we found, as we insisted on both, is that it led us to recruit and onboard some really outstanding directors, the majority of whom happened to be women. Our business success has been a direct result of building a team that represents and supports the culture of the company. And along the way, it allowed us to achieve gender parity.

Q: What do you think other public companies can learn from your company about building a diverse board?

A: I think companies can be more creative about how they onboard new talent, like expanding the number of directors on their board in order to bring in additional skillsets versus waiting until a director retires. This creates an opportunity for a cultural hand-off to the next generation of board members. Through attrition and retirement, board numbers naturally drop back down to an optimal size.

That strategy definitely made a difference for us. Connecticut Water had a much bigger board 10 years ago and once we had the people in place to support our business goals and culture, we gradually brought the board size back down to where we’re comfortable. This allowed us to improve our overall skill set on the board in a quicker fashion.

Q: How has gender parity in the boardroom impacted your company’s corporate governance and organizational performance?

A: It’s been transformative for us as an organization, for a number of reasons.

For almost 100 years, our company operated solely in the state of Connecticut. We developed a strategic initiative that called for our company to diversify by moving into another state. One of our board members, Heather Hunt, is one of the few individuals in the country who has actually been a public utility commissioner in two states—Connecticut and Maine.

Heather’s background and experience in Maine has aided us in making a number of significant acquisitions in Maine since 2012, which has grown our company 35 percent. She was able to knowledgably discuss the business climate in Maine, had very constructive relationships there, and was a really strong voice on the board regarding risk management. She was invaluable in those acquisitions.

And just a couple of years ago, we were the successful proposer to become the region’s water supplier to a portion of Connecticut that included the University of Connecticut. We were in competition with a number of other significant utilities. Our corporate governance chair, Mary Ann Hanley, is an attorney who has also served two governors in Connecticut. Her understanding and knowledge of state government was critical. She was my go to person. I’d ask for her advice and she’d recommend the people I needed to talk to. Mary Ann was the real force on the board that helped us successfully deliver that transaction. This agreement was a significant win for us and for our shareholders because we will be the water supplier to the University and surrounding region for 50 years to come.

We’ve also instituted an excellent enterprise risk management program in the past couple of years. This initiative was led by Lisa Thibdaue, who is chair of our audit committee. Lisa was an executive at Northeast Utilities, obviously a much larger utility, so her ability to “scale up” our approach has been very helpful.

People talk about utilities as being “a simple business”, but a water business is among the most capital and labor intensive of all businesses. We are heavily regulated from water quality to environmental and service standards. Scale is incredibly important, but we’re still a local business. During the past decade, we’ve delivered world class customer service and experienced dramatic growth while protecting our brand through very effective risk management at all levels of the company. Our board has driven that process.

Q: Is your company’s executive leadership team as gender diverse as your board? How does your company nurture and develop its pipeline of female executives?

A: Yes, our executive leadership team is diverse as well and we’re really proud of that. We have three women and three men serving as senior officers, so it goes further than just the board. We have made a conscious effort to recruit more women to serve throughout our business. It definitely helps for the young women in our organization to see that we have very prominent women on our board and as part of our senior leadership team.

Q: Has it been difficult to find qualified female executives to serve on your executive leadership team and the board?

A: I believe when companies make diversity about just achieving a certain number, they miss out on a lot of opportunities. What has made us successful is creating a business culture that engages stakeholders. And that’s led us to more women directors and officers.

We’ve done a bit of recruiting with professionals, which can be helpful. But mostly we’ve taken our time and engaged our own directors in helping us to find the right candidates. Recruitment and vetting of new directors is the responsibility of the entire board at our company, not just the responsibility of the corporate governance committee. The entire board is engaged and talks about what skillsets we’re looking for in a new director. They all have a stake in bringing on new directors who can be successful and add to the dialogue. Having directors who know and understand the culture we’re cultivating has been key to our success. We’re looking for people with different viewpoints and skillsets that also align with our common culture.

Once we identify a candidate, we go through a long assessment process. We don’t bring them on board, unless we’re convinced they are a good fit and possess the right skills. We aren’t really interested in recruiting the “intrepid CEO” type of a board candidate, that isn’t what we look for. Instead, we recruit people who embody the service ethic that we try to create here, who really know how to work well as part of a team, aren’t afraid to step up and raise issues of concern and are willing to listen to what others have to say. These traits make a difference throughout the entire organization and set the tone for leadership throughout the company, not just at the board level. I think this approach has contributed greatly to our success.

Q: It sounds as though Connecticut Water has made diversity and an inclusive corporate culture part of its brand.

A: Absolutely. For the long term success of a utility, or any public company for that matter, you really do have to take care of and serve customers, shareholders and employees. A tangible example of how we do that can be found in our executive compensation program. Naturally, it is heavily weighted in total shareholder value and earnings per share, but through the leadership of our Lead Independent Director, Carol Wallace, we have included a component for customer satisfaction, measured by a third party. We also have a component for employee engagement and satisfaction. While it is definitely not typical for utilities to have an employee satisfaction number as part of executive compensation, it works and I believe in it.

On the board level, we try to be efficient and a good steward of our board members’ time. Carol ensures every voice is heard. I can say without hesitation that no one fears being that one voice at the boardroom table asking for more information or expressing concerns about an issue. And as CEO, I recognize that’s in service to me as well. These are tough times and challenging responsibilities we face. I’m not afraid to step back and take a little more time to consider a decision or think more about an issue because the board trusts me to do that. Our board has created an open, collaborative environment while taking very seriously the stewardship responsibilities that it has in delivering safe drinking water and shareholder value.

Connecticut Water Service, Inc. is a $625 million public utility company trading on Nasdaq’s Global Select Market under the ticker symbol CTWS. The company’s core business is supplying public drinking water to customers in Connecticut and Maine. The company also operates water and wastewater facilities on a contractual basis, offers customer service line protection programs, and provides bulk deliveries of emergency drinking water.
Publication Date*: 11/29/2016 Identification Number: 1289 Mailto Link
Frequently Asked Questions
  Eliminating the Diversity See-Say Problem: Lessons from the Clinton Campaign
Identification Number 1278
Eliminating the Diversity See-Say Problem: Lessons from the Clinton Campaign
Publication Date: November 3, 2016

Nasdaq recently spoke with Bernard Coleman III, Chief Diversity and Human Resources Officer of the Clinton campaign. Coleman shared his thoughts on nurturing a culture of diversity in a field typically dominated by white males, finding diverse leadership talent, and “embracing the uncomfortable.”

Coleman is the first chief diversity officer ever hired for a presidential campaign on either side of the aisle. He was tasked with helping create a staff that was reflective of the electorate Secretary Clinton is wooing, and he has done so very successfully: the campaign is staffed with 38.7% people of color and 54.8% women. Equally impressive is the diversity among Secretary Clinton’s senior leadership team, which is currently staffed with 33.2% people of color and 49.2% women. The vast majority of the campaign staff are millennials.

Q: Many companies struggle with improving diversity incrementally, let alone achieving gender parity and racial diversity of over 30% at the senior leadership level. What can corporate America learn from the diversity strategy executed by the Clinton campaign?

A: First, any diversity strategy needs to start at the top. Diversity has been important to the Clinton campaign from day one by virtue of the Secretary’s vision and her commitment to diversity and inclusion.

The Clinton campaign has executed a diversity plan that echoes the Secretary’s values and we make sure it washes over the campaign, and had buy-in from the entire staff—including senior staff, mid-level managers, and our volunteers. We have strategic diversity indicators and standards that ensure we’re accountable for achieving diversity, inclusion, cultural competence and equity.

Unfortunately, many organizations have a see-say problem: their HR departments and websites state one thing about their mission for diversity, but when you really get inside the organization the culture does not reflect what they’ve been saying. Buy-in and true commitment can only come from the top, from leading by example. You can’t change the culture if you’re not authentic in your commitment to changing it. Employees see right through that and it undermines future efforts of the organization to find diverse talent.

Q: Speaking of finding diverse talent, where did you recruit diverse leadership staff for the campaign?

A: Staffing a campaign is different than staffing a corporation, but certain aspects of the process apply to both. For organizations outside of the campaign world, it starts by not limiting the definition of “what does qualified leadership look like?” For example, if you believe your senior leaders always have to come from the same top five Ivy League schools, you’ve severely limited the pool of available talent. Organizations need to get very strategic, almost surgical, in terms of locating networks and resources that are dedicated to finding and attracting diverse talent. Companies need to craft better job descriptions by identifying what success of that role looks like, versus what the person in the role looks like. That exercise alone will change and expand the search parameters.

All of this takes a lot of leg work, and there are no shortcuts.

Q: What are the key components of an effective diversity and inclusion (D&I) strategy?

A: Don’t look at diversity and inclusion as a problem. Diversity is an opportunity disguised as a problem. When viewed as an opportunity, the organization tends to proceed strategically and proactively, as opposed to just reacting when the issue is exposed. The diversity of Secretary Clinton’s campaign staff is bearing all kinds of fruit: we are representative of the electorate, so we are able to differentiate ourselves and frame messages that resonate with different constituencies; we understand where voters are coming from on the issues; it prevents myopia and better informs the campaign; and it makes us more innovative in terms of how and where we present our positions to the American people.

Embrace the uncomfortable. Recognize that inclusion and diversity go hand in hand. A lot of organizations focus exclusively on diversity as it relates to hiring, yet they forget inclusion. If people don’t feel valued, heard, and included, they are going to leave. When they DO have their essential needs of being valued and belonging met, they’ll stay and they’ll go above and beyond. So you need to research your target market, do some homework to understand why certain groups are underrepresented, and identify the barriers those folks face to getting in and feeling welcome. And once you bring new hires aboard, you need to be prepared to evaluate as well as break the hiring processes that don’t work and embrace the fresh new ideas coming in with a diverse staff. Organizations simply cannot do the same things the same old way and expect a different outcome just because your staff is more diverse now.

Assign a value to it. The organization needs goals and measurements tied to diversity, so it’s easier to track and not an intangible thing. Staff needs to fully understand there is a real value associated with diversity and inclusion. Incentivize this effort —perhaps it’s providing public acknowledgement to the achievement or tying a bonus structure to meeting the overall staffing and retention goals the company has set for diversity— this helps people resist the urge to shortcut recruiting processes and motivates them to nurture a more diverse and inclusive culture.

Q: What are the elements of an inclusion strategy that take an organization from “say it” to “see it”?

A: The elements of a diversity strategy need to be varied, so employees aren’t just force-fed diversity training, but the company begins living and breathing it organically.

Take an assessment. Literally ask diverse employees “What would make you feel more comfortable here?” At our campaign headquarters, it’s very refreshing to walk around and see so many different faces, representing so many views. We have people wearing Black Lives Matter t-shirts, we have LGBT flags hanging from the ceiling. There’s something welcoming for everyone, and it feels like an inclusive environment the minute you step foot in the door.

Have a buddy system. We implemented this within the campaign, which is headquartered in New York. For some staffers who had never lived in New York or worked on a campaign, we realized it could be overwhelming to adjust at the same time they were coming up to speed on a fast-paced work environment. It helped them acclimate to campaign life in the city by having a fellow staffer assigned to show them on a practical level how to navigate this new environment.

Establish employee resource groups. This may seem counterintuitive, as the whole point of inclusion is mixing and mingling, but sometimes people want to take refuge in their respective “tribes.” They feel comfortable seeing other people like them, or at least knowing they have the option of joining these groups, if they need it. ERGs can be of great support for employees who have recently come on board, adjusting to the speed of the campaign, the responsibilities of the role and adapting to the culture. It’s a supportive effort to acclimate as quickly as possible and feel confident while doing so.

Assign formal advocates/mentors. With the campaign, we have developed a program called “Talk to Me” which provides an empathetic ear to staff when something is going on at an interpersonal level that might be causing strife for that person. This is for issues within the individual, versus providing support to acclimate to a new city or neighborhood as the Buddy System does.

Offer a multifaceted curriculum of diversity education. When diversity training becomes mandatory or too top-heavy, it has the tendency to make people do the opposite intent of the training. When we educate children, we adapt teaching methods to their personal learning styles, and the same concept applies to adults. So it’s important to provide diversity education and information in a variety of forums and through multiple channels. As a result, employees feel included, feel supported, empowered and know the organization is living its values.

The future of America.


Bernard Coleman leads Hillary for America's (HFA) Diversity and Human Resources initiatives. Prior to joining HFA, Bernard served as Deputy Chief Diversity Officer and Director of Human Resources at the Democratic National Committee. He also held senior level positions with the Democratic Congressional Campaign Committee and the Society for Human Resource Management.
Publication Date*: 11/3/2016 Identification Number: 1278 Mailto Link
Frequently Asked Questions
  Taking Stock of Diversity
Identification Number 1253
Taking Stock of Diversity
Publication Date: September 7, 2016 

The following is an excerpt from a speech given by Nasdaq EVP and General Counsel, Ed Knight, at the SAIS Global Conference on Women in the Boardroom on September 7, 2016.

If you visit Nasdaq’s MarketSite in New York City, you have to fight the crowds at Times Square. We chose not to locate the public face of Nasdaq on Wall Street or at Rockefeller Center. We want to be at the crossroads of America, and the world.

You only need to stand a few minutes at 43rd and Broadway to get a sense of the diversity in this great land of ours and in the world today. You will hear a half a dozen languages in the course of a few minutes, and see people of all races and nationalities.

This is one of the strengths of our country- - its great diversity. At Nasdaq, we help put that diversity to work. For one, we are obligated by law to provide access to our market without discrimination or bias, and we take that obligation very seriously. As the first electronic market in the world, we are built on a foundation of impartial technology; we do not see ourselves as a comfy old boys club like some of our competitors might.

We believe that the boards of public companies should be as diverse as their investors and customers because that makes good business sense: Over time, diverse boards will have more robust debates, make sounder decisions, understand customers better, and attract higher performing employees.

As argued in Bloomberg in a well-noted 2014 editorial, while “[e]quality is a worthy goal on its own terms, of course….for the corporate world, the better rationale for gender diversity is financial….Companies with at least one female director had better returns for six straight years.”

And when we say diverse at Nasdaq we mean all types of diversity: gender, race and skills. Strong boards must face the challenge of a global, rapidly changing economy with a full set of talents and experiences. Achieving gender diversity is but one step in the process of building a strong board.

Of course, gender diversity is an area that has received particular focus by our global organization.

We can report some visible progress. For example, Nasdaq owns and operates the stock exchanges in Sweden, Finland, and Denmark. In those countries, women make up 31%, 30% and 23.4% of public company boards, respectively.

These results are supported by a public focus and dialogue on the need for diversity throughout the Nordic countries. These discussions often occur at Nasdaq conferences and events in the region. At Nasdaq Stockholm this May we sponsored an all-day program titled, “Gender Equality in the C-Suite and Boardroom”.

And, the Nasdaq Holding Company and Exchange Boards have improved their representation of women and minorities.

As you know, progress among public companies here in the U.S. has been considerably slower and less dramatic than in the Nordics. To get a better sense of what is happening, we recently collected and analyzed June 2016 data from our listed companies and combined it with NYSE data. We found signs of progress in looking at these 4,397 companies:
  • 5,195 board seats are held by women. That is a 3% increase in the total number of board seats over 2015. Year-over-year increases in the percentage of board membership do not show the full picture of the progress that is being made.
  • The board experience among women is being spread throughout a wide group of women. For example, only 34% of the women on boards sit on multiple boards.
  • And some of these women directors are starting their careers as board members at a young age. 81 women serving on public boards were under the age of 40. This is in comparison with the average board member whose age is 60.
  • In our research, we found 366 companies have at least 30% female board membership and an additional 895 companies have reached the 20% threshold. Fourteen Nasdaq companies have even reached 50-50 gender parity.

While progress is still slower than we would all like, we believe these numbers are encouraging nonetheless.

But to make real progress, change has to be made with the conviction that not only is it the right thing to do but that a diverse board will allow my company to compete more effectively and outperform the competition. In my 17 years as a public company executive, I can tell you that the search for that competitive edge is relentless and constant. The data indicates that diversity brings a performance edge.

But attention must be paid. And Nasdaq will continue to shine a light on this topic for our 3600 globally-listed companies.

Our Nasdaq Governance Clearinghouse website devotes considerable attention to the topic of diversity and inclusion on public company boards. Over the past year, we’ve written and promoted numerous articles through Nasdaq’s vast social media channels, discussing best practices in developing diverse boards.

More public disclosure will allow us to keep the topic front and center, so like the U.S. Chamber of Commerce, we support Congresswoman Carolyn Maloney’s modest legislation to improve diversity disclosure in financial reports.

We will continue to urge our companies to start the board selection process with a diverse slate of candidates. Janice Ellig, named by Business Week as one of "The World's Most Influential Headhunters”, has suggested following the “Rooney Rule plus” when looking to fill an open board seat. Modeled after the NFL’s Rooney Rule of selecting head coaches, candidate pools would be comprised of at least 50% women and people of color. If, for instance you had a slate of 10 candidates, the pool would include at least 3 women and 2 people of color.

And the practice of regularly refreshing boards must be followed to make more diverse boards possible but equally important to maintain a competitive edge.

Ultimately, boards take their character and composition from their leadership. CEOs and the boards themselves must drive the change from within and for economic, competitive reasons as much as to meet public pressure. In this regard, there is room for more CEOs to step up and make diversity across the corporate world a reality.

Forced change imposed from the outside has been shown to be the least effective way to change public companies. Public companies must be and are designed to deal with economic realities and the need to compete as their top priorities.

Fortunately, diversity in board composition clearly meets those priorities, and Nasdaq is focused on highlighting that to its companies.

As Anders Thorendahl, the Chief Investment Officer of the Church of Sweden, told the audience at the Nasdaq diversity conference in Stockholm earlier this year: “investors need not choose between diversity goals and competitive returns…diversity outperformance creates market outperformance.”
Publication Date*: 9/7/2016 Identification Number: 1253 Mailto Link
Frequently Asked Questions
  Nasdaq Talks to. . .Janice Ellig about Moving the Needle on Boardroom Diversity
Identification Number 1242
Nasdaq Talks to. . .Janice Ellig about Moving the Needle on Boardroom Diversity
Publication Date: August 4, 2016

Nasdaq recently spoke with Janice Ellig, co-CEO of Chadick Ellig, an executive search firm focused on recruiting board directors and C-suite executives based in New York City. Named by Business Week as one of the “World’s Most Influential Headhunters,” Ms. Ellig is a passionate advocate for qualified women seeking a seat at boardroom tables. Ms. Ellig offered her insights on the barriers to improving gender diversity in the boardroom and why CEO-sponsorship is the key to moving the needle on gender diversity.

Q: What are the primary barriers for women executives trying to break into the boardroom?

A: One of the keys to opening the boardroom door is being part of the CEO network, and cultivating a strong reputation within it.   Successful executives understand that a more critical factor than “who they know” is “who knows them” — and how the network views them as a professional.   Many qualified female executives are just not part of that network and contributing to this is that women make up less than 17% of C-Suite executives in the S&P 500.  More women need to fill the C-Suite ranks to become the pipeline for the boardroom.  Companies need to focus on giving women the opportunity to get the experience to move up to the corner office. 

That’s why the Women's Forum of New York established a database of women who have been sponsored by CEOs.  When a CEO sponsors a woman, she has that gold stamp of approval.  The endorsement by a CEO is critical - it gets women known by the proverbial boardroom network. 

Boards are like any “club.”  CEOs and directors want to “feel comfortable” when considering board candidates and when vetting a potential board member; a candidate endorsement from someone in their community – a CEO – goes a long way.  Women may have the qualifications, but boards want to know that another CEO has seen that person operate effectively in a boardroom setting.  In fact, when PwC surveyed approximately 900 directors in 2012, nine out of ten of them said that they refresh their board from the networks of the people they know.   I’ve heard stories where top-notch executive women did not get a board seat because nobody on that board knew someone who knew her. 

But the key barriers are focus and commitment by every board in the U.S. where there are less than 40% women on their board.  Unfortunately, only 28, or less than 3% of the Fortune 1000 companies, have 40% or more.  In 2015 these companies received special recognition at the Women’s Forum of New York biennial Breakfast of Corporate Champions.  The Women’s Forum of New York promotes parity within the decade by 2025 and shares that getting there is not complex.  The solution is actually simple:  fill every other opening or at least 40% of the openings annually with a woman!  Ten years with at least 150 new board seats filled by women get us to 1500, plus the current 1000 seats held by women, is 2500 women on boards; parity is achieved.

Q: Can you tell us more about the Women’s Forum Database of CEO-Sponsored Board Ready Women and its Breakfast of Corporate Champions?

A: The Database is national, as well as international, and accessible free of charge to board nominating committees and search firms.  Any qualified woman executive can be listed in the database; she does not need to be a member of the Women’s Forum.  We ask all CEOs to submit information to the Women’s Forum and in doing so the CEO is saying, “This woman is board ready and should be on a board.” These candidates have a unique appeal because they are already vetted by CEO sponsorship.  If every Fortune 1000 or S&P 500 CEO or Board Chair sponsored a woman, the Women’s Forum of New York will have over 1000 board ready women in our database.

We currently have 170 women in our database and all have been sponsored by a CEO/Board Chair.  CEOs such as Ajay Banga of MasterCard, for instance, has sponsored nine women from his organization, and Richard Davis has sponsored four women from U.S. Bancorp.  In fact, Richard Davis was an Honorary Co-Chair, along with Maggie Wilderotter, of the 2015 Breakfast of Corporate Champions where we honored those companies with 20% or more women on their boards.  Other sponsoring CEOs include Ian Read, Pfizer; Ken Hicks, Footlocker; Ken Chenault, American Express; Mark Bertolini, Aetna; Roger Ferguson, TIAA-CREF; and Terry Lundgren, Macy’s.

The Women’s Forum of New York launched the Corporate Board Initiative to accelerate the pace of change for women in boardrooms.  Its signature event is the biennial Breakfast of Corporate Champions which honors companies and raises awareness of having a more balanced board, with the goal of achieving parity by 2025. 

At our 2015 event, over 600 executives, government officials, and thought leaders attended the Breakfast of Corporate Champions.  Once CEOs come to the Women’s Forum of New York’s Breakfast of Corporate Champions event, they typically sponsor a woman. 

Learn more about how you can access the Women’s Forum Database of CEO-Sponsored Board Ready Women or sponsor a board-ready candidate >>  

Q: How does a woman executive find a sponsor? 

A: Women need to get out of their comfort zone - speak, write, attend meetings and conferences and become viewed as a thought leader, an expert.  Within the organization a woman must be known by the CEO and members of the board and make them aware that she wants to serve on a board.  She needs to speak up and be confident in her areas of expertise.  Women who are internally and externally “known” will be able to secure CEO sponsorship. Women cannot wait to be invited to the party; they must let their interest to serve on a board be known – just like men!

Q: This past year the Women’s Forum gave special recognition to corporations that achieved gender parity with 40% or more on their boards. What are some of the best practices of the companies that reached that threshold? 

A:  The leadership of these companies truly embrace gender diversity in the boardroom as a strategic business imperative.  They know it reflects their markets:  customers, employees, shareholders and communities in which they operate.  They know they cannot ignore 51% of the population.  Unfortunately, many companies still are not “focused and committed” to having more gender diversity in their boardrooms and C-Suites.  The gender parity needle is moving far too slowly.  The Catalyst 2015 study shows that women on boards moved from 19.2% to 19.9% - we have not yet broken through the 20% threshold.   Since Catalyst started tracking women on boards the pace of change has been about .5% for the past 20 years; at this rate, some estimates are that it will take over 50 years to reach parity. Although studies by Catalyst, McKinsey, E&Y/Peterson Institute, and Credit Suisse Research Institute all show a strong correlation between better financial performance and gender diversity on boards; progress is not happening. We know that overall with more women on a board, financial performance is enhanced as well as corporate governance and reputation. 

Progressive companies realize women are the buyers of their stock, the employees they hire, and their customers.  These companies truly believe that to be effective, a board needs to have a diverse composition which reflects the markets in which they operate. 

Q: Why was Lord Davies so successful improving the gender balance on British boards and what aspects of the UK model would work well in corporate America?   

A:  Lord Davies took no prisoners.  He was adamant that corporations cannot continue to ignore 51% of the population.  He also publicly dismissed the idea that a lack of qualified women in the pipeline was to blame and that companies could not continue to ignore all of that talent.  Quoted in the Independent on March 22, 2014, Lord Davies said “If you are a CEO and you don't have gender diversity or diversity in general as a top issue, then you've been asleep at the wheel for the last few years."  And furthermore, he added, “This is not about aiming for a specific figure and is not just about promoting equal opportunities but it is about improving business performance. There is growing evidence to show that diverse boards are better boards, delivering financial out-performance and stock market growth.”

Scott Page, professor at the University of Michigan, and author of the book The Difference, showed studies where less skilled, heterogeneous groups on average made better decisions than more skilled homogenous groups.  Lord Davies made gender parity in the boardroom his mission.  Working with The 30% Club, founded by Helena Morrissey, CEO of Newton Asset Management, the U.K. more than doubled the representation of women on FTSE 100 boards from 12.5% in 2010 to 26% in 2015.  A dramatic cultural shift occurred in the U.K. business community without quotas.  How?  Peer pressure. Lord Davies personally called influential CEOs to get more women on their boards.  He and Helena went even further, convincing CEO’s to reach out to other CEOs to shame them if they lacked female representation. 

Unfortunately, there is no one in the U.S. playing this role, at least not yet.  While the pipeline of qualified women executives is quite robust, and SEC Chair Mary Jo White has publicly stated “there is no pipeline issue,” the focus and commitment in U.S. boardrooms is lackluster.  Our SEC Chair, Mary Jo White, also said at the International Corporate Governance Network Annual Conference on Jun 27, 2016, “Diversity on boards, and in organizations more generally, is very important to me and I have not shied away from expressing my strong views on the topic...I continue to urge that CEOs and boards of public companies act aggressively to alter this landscape and to do so quickly.  Not only is it the right thing to do – it makes good business sense.”

We need “CEO warriors” to step up and build a coalition around our focus and commitment in getting to 30% by 2020 and parity by 2025.  Peter Grauer, Chair of Bloomberg, is one warrior who brought The 30% Club to the U.S. and has a goal of 30% by 2020.

Search firms have a role to play in this as well.  As a responsible search advisor, a slate of candidates should be at least 30% women.  They did this in the U.K., why not in the U.S.? I also think search firms should disclose their placement rate of women and minorities on boards; transparency is needed.  According to Catalyst, in 2015 73% of board placements were men.  Therefore, search firms need to recognize their role in placing only 27% women on boards; that's not good enough!  Search firms too need to be champions of change! To move the needle beyond 19.9% search firms should place at least 40% of your board seats with women.

Janice Ellig is co-CEO of Chadick Ellig, an executive search firm focused on recruiting board directors and C-suite executives based in New York City.  She is also the current Chair of the Women's Forum Corporate Board Initiative and co-author of two books: Driving The Career Highway, 20 Road Signs You Can't Afford To Miss and What Every Successful Woman Knows: 12 Breakthrough Strategies to Get the Power and Ignite Your Career. She also writes numerous professional articles focusing on gender diversity and career management, including these recent postings:

Proof Networking is Actually Worth Your Time >>

4 Ways to Get More Women on Boards >>

How Women Dispel Groupthink >>

The Case for “Breaking into Boardrooms:” A Call for Gender Parity on S&P 500 Boards by 2025 >>
Publication Date*: 8/4/2016 Identification Number: 1242 Mailto Link
Frequently Asked Questions
  Making Sustainability Reporting Work for Investors and Companies by Alan L. Beller
Identification Number 1228
Making Sustainability Reporting Work for Investors and Companies by Alan L. Beller
Publication Date: July 27, 2016

I became Director of Corporate Finance at the SEC in January 2002, in the immediate aftermath of the Enron accounting and auditing failure and bankruptcy, and most of my first 18 months at the SEC were spent on financial reporting, audit committees and the like. Even then, however, others at the SEC and I were convinced that, in the 21st century, financial information doesn’t provide a complete picture of corporate performance. We sought, with limited success mostly due to lack of bandwidth and a practicable plan for moving forward, greater emphasis on operating metrics and other forms of non-financial disclosure.

Investors agreed with the efforts then, and they agree even more violently today. In a 2015 CFA Institute survey, 73 percent of institutional investors indicated that they take sustainability (environmental, social, and governance) issues into account in their investment analysis and decisions, to help manage investment risks.

Notwithstanding the title of a recent book regarding the future of accounting, excerpted in the Wall Street Journal, accounting is not dead, and financial information and analysis remains critically important. However, investors need better disclosure in respect of sustainability matters, and under current reporting systems companies have the ability to provide what investors need. The SEC has acknowledged the need for disclosure to evolve in this area. In its long-awaited recent Concept Release regarding disclosure effectiveness, currently open for public comment, the SEC asks “which, if any, sustainability and public policy disclosures are important to an understanding of a registrant’s business and financial condition and whether there are considerations that make these disclosures important to investment and voting decisions.”

These questions bring companies and investors to an inflection point, whether or not the SEC expeditiously takes the next steps towards disclosure effectiveness. Investors want and already receive disclosure regarding sustainability and related matters through a variety of channels. Companies already provide such information, through SEC disclosures, websites, sustainability reports and questionnaires. What is needed now is a pathway to make sustainability reporting more cost-effective for companies and more decision-useful for investors. In particular, for companies sustainability reporting is already reality. The full-stretch ostrich position of ignoring it and hoping it will go away, to which some companies still seem committed, will not work. What is necessary is implementation of robust and effective governance around sustainability disclosure and effective engagement with investors, as well as other stakeholders.

As noted above, companies currently report sustainability information in a variety of channels, including the periodic reports and offering documents filed with the SEC, sustainability reports, and investor questionnaires. However, standalone sustainability reports lack standardization and comparability and in at least some cases reflect insufficient attention to existing regulatory requirements. The generalized requirements followed for some of these reports also result in both companies and stakeholders spending time and focusing attention on unimportant information. Investor questionnaires raise their own issues. Questionnaires follow different formats and seek information in non-standardized ways, and information made available to an investor may differ from that provided by the company through other channels or to another investor. This disharmony of information is not good for a company, and if there is differentiated or selective disclosure of information that is in fact material under the federal securities laws, a company’s practices may run afoul of the SEC’s Regulation FD (Fair Disclosure). This current situation provides ample evidence that companies need effective governance around the sustainability disclosure choices that they are making now.

A critical area of focus for governance and engagement involves disclosure in a company’s filings with the SEC, including the annual report on Form 10-K (or for foreign companies registered with the SEC, Form 20-F). This is the appropriate channel for disclosure of improved sustainability information to investors within the framework and requirements of the federal securities laws, and it is the one in which my principal expertise lies.

Other disclosure efforts, including those aimed at other stakeholders, should be considered as complementary to and not competitive or conflicting with the decision-useful disclosure that investors deserve under the securities laws. Continuing investor and other stakeholder engagement with companies regarding sustainability disclosure is not inconsistent with the efforts of SASB, described below, to use the existing legal framework and its standard-setting to ensure disclosure of material sustainability information in SEC filings. Neither should these other activities delay or prevent the accomplishment of SASB’s mission to make these material disclosures in SEC filings a reality.

Regulation S-K and analogous SEC disclosure regulations, which set forth the specific disclosure requirements associated with Form 10-K and other SEC filings, contain principles-based requirements that call for disclosure of both current and forward-looking information. As the SEC noted in its 2010 guidance regarding disclosure related to climate change, certain sustainability information should be disclosed under existing SEC rules. A lot of good sustainability disclosure requires careful analysis and disclosure of matters as they exist today. At least as much requires similar careful analysis and disclosure of forward-looking information, or how tomorrow is reasonably likely to turn out in respect of material matters, based on what is known today. In particular, Item 303 of Regulation S-K requires that companies describe known trends, events, and uncertainties that are reasonably likely to have material impacts on their financial condition or operating performance in the so-called Management’s Discussion and Analysis sections of their annual and quarterly reports and securities offering documents. Similar requirements exist for non-US issuers registered with the SEC in their annual reports and offering documents filed with the agency.

Because of these requirements, companies often include sustainability information in SEC filings. SASB’s research shows that information regarding 74 percent of SASB disclosure topics is already being disclosed in companies’ annual reports on Form 10-K. However, currently these disclosures are only rarely presented in a manner that is decision-useful for investors. More than 40 percent of all disclosures on sustainability topics contain boilerplate language: broad, generic, nonspecific wording. Current sustainability disclosures in SEC filings do not provide investors with comparable, industry-specific data with which to evaluate and compare performance.

Disclosure of performance on sustainability topics that would be decision-useful to investors and cost-effective and sensible for companies and that would be equal to the quality that markets expect for financial information—can best be accomplished via a clear focus on material information and on an industry-specific market standard. Just as the markets have a standard for material financial information—US GAAP—the markets need a standard for material sustainability information.

This is the need SASB was created to address. SASB standards are designed to help companies effectively disclose material sustainability information and comply with regulatory obligations, working within the framework of existing U.S. securities laws. SASB’s provisional standards have been developed, and SASB is embarking on a project to make the provisional standards final, in both cases through processes that are designed to produce standards that are cost-effective and decision-useful, and to embody in those standards industry-specific sets of disclosure topics and metrics that are reasonably likely to constitute material information for companies in that industry. SASB seeks to incorporate by reference metrics already in use by industries where it concludes that is practicable.

In order to move from boilerplate disclosure to metrics, companies will need to strengthen their governance and internal controls and procedures, as well as procedures for independent assurance. However, accepted improved disclosure on material sustainability factors will have benefits for companies. First, they will reduce the cost and burden of the plethora of varied shareholder resolutions and questionnaires that will be the most likely alternative to market standards. Second, there is some support in recent academic research that suggests that by focusing on the limited set of sustainability related risks and opportunities identified by the SASB standards—those reasonably likely to have material impacts—companies can achieve superior results, including return on sales, sales growth, return on assets, and return on equity, in addition to improved risk adjusted shareholder returns.

In addition to improving the quality of sustainability disclosure in their SEC filings, companies need to ensure their description of material information is consistent across corporate communication channels. For example, 81 percent of the S&P 500 companies now produce stand-alone sustainability reports, designed for a broad range of stakeholders. These reports often describe matters as “material” but in some cases use that term more loosely than is the case under federal securities laws. The inconsistent characterization of information as material across corporate communications channels within a company may present legal, reputational and operational risks and itself calls out for more robust governance. Significant issues arise as a result of inconsistent characterization of information as material among companies in an industry.

The SEC’s disclosure requirements including Regulation S-K already exist. To make sustainability reporting work better for companies, we need a market standard and a commitment by companies to embrace that standard. A market standard for sustainability information should reduce the pressure for additional regulation and the current practice of scattershot disclosure. It should also level the playing field, so that no one company in an industry is required to say materially more, or less, than another. Lastly, it will reduce the uncertainty around what is material, and maybe even drive competitiveness by helping companies improve performance on the most important issues for their industry.

Alan Beller is a Senior Counsel at Cleary Gottlieb Steen & Hamilton LLP in New York and a Board Director of the Sustainability Accounting Standards Board (SASB). He is a former Director of the Division of Corporation Finance and Senior Counselor to the Commission at the SEC.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.
Publication Date*: 7/27/2016 Identification Number: 1228 Mailto Link
Frequently Asked Questions
  Investors Zero in on Correlation between Corporate Sustainability and Financial Performance
Identification Number 1216
Proxy News
Investors Zero in on Correlation between Corporate Sustainability and Financial Performance
Publication Date: June 6, 2016

Could sustainability performance be the hot-button issue that catalyzes a long-term mindset within the investment community? A survey done by MIT Sloan Management Review and The Boston Consulting Group indicates it may already have. They conducted interviews with 3,000 managers and investors from 100 countries in their 2016 survey, Investing for a Sustainable Future.

The survey notes that $1 of every $6 invested during 2014 went to sustainability investment strategies, citing three key factors driving interest in sustainability investing:

  1. Increasingly sophisticated modeling and better analytics are “broadening investors’ fields of vision” and showing how and when sustainability investments create shareholder value:

      “Organizations from accounting firms to the United Nations are developing and offering models that can assess and calculate the impact of ESG factors on a company’s performance and future prospects.”
  2. Academic institutions and investment firms are researching and finding correlations between effective management of material sustainability issues and strong financial performance:

      “A 2011 Harvard Business School study compared the performance of high- and low-sustainability companies. In examining differences in governance and culture, the HBS researchers found that high-sustainability companies significantly outperformed other companies in terms of stock market performance and other financial performance measures.”
  3. The investor community is recognizing and better quantifying the connection between strong sustainability performance, value creation, and risk reduction.

      “…75% of investment community respondents see improved revenue performance from sustainability as a strong reason to invest. Almost 75% of investment community respondents feel strongly that increased operational efficiency often accompanies sustainability progress. In addition, more than 80% of investor respondents indicate that good sustainability performance increases a company’s potential for long-term value creation.”

The study also highlights a number of disconnects between corporate management perceptions and investor attitudes regarding sustainability investing, including the extent to which it is a factor in investment decisions, the degree to which corporations are sharing their sustainability programs and corporation’s success in building compelling business cases:

Corporate executives have not kept pace with the rise of sustainability investing: Only 60% of managers in publicly-traded companies believe that good sustainability performance is a material factor in investors’ investment decisions, while 75% of senior executives in investment firms say that strong sustainability performance is materially important when making investment decisions.

Investors believe that strong sustainability performance creates tangible value: Investors recognize strong sustainability strategies as increasing potential for long-term value creation. 75% of investors cite improved revenue performance and operational efficiency as strong reasons to invest in a company with good sustainability performance, while more than 60% believe that it reduces a company’s risks and over half believe it lowers the cost of capital.

Poor sustainability performance is a deal breaker: Roughly 60% of investment firm board members say they are willing to divest from companies with a poor sustainability footprint, while nearly half of investors say they will not invest in a company with a record of poor sustainability performance.

Corporations don’t have a strong story to tell: Executives and IR professionals are doing little to develop or communicate their ESG performance story. And, information about sustainability within the corporation trickles down slowly. In corporations, nearly 80% of board members and 85% of C-suite executives are fully informed about their organization’s sustainability efforts, but only 51% of senior managers and 31% of middle managers and front-line employees are equally well informed.

Corporate executives care more about sustainability indices than investors do: While 90% of corporations responded that their company promotes inclusion on these lists, only 36% of investors said that being included in a major sustainability index is an important factor in their investment decisions. Just 32% of managers in public companies said their business is included in an index.

Many companies base sustainability efforts on values versus business case: Nearly 90% of respondents said that a sustainability strategy is essential to remaining competitive, but only 60% of corporations have such a strategy in place. Only 25% have developed a positive business case.

Read more at MIT Sloan Management Review >>
Publication Date*: 6/6/2016 Identification Number: 1216 Mailto Link
Frequently Asked Questions
  Gender Equality in the C-Suite and Boardroom: A Report from the Nordics
Identification Number 1219
Gender Equality in the C-Suite and Boardroom: A Report from the Nordics
Publication Date: May 18, 2016

Last week the Nasdaq Stockholm exchange hosted a knowledge summit on the dynamics of gender and inclusion in the workplace, specifically at the topmost level of the organizational chart. The all-day program, titled Gender Equality in the C-Suite and Boardroom: Navigating Institutional Investor Demand and Business Capability, attracted nearly 100 attendees. Participants came from large Swedish pension funds and smaller sustainability investment firms; from board members and the search firms that fill board seats; and from the business, research, and academic communities.

The event posited a provocative question: What will it take to achieve 50-50 parity? Most companies (in the Nordics and elsewhere) start with a 50-50 gender mix in entry level positions. But the statistics reveal startling drop-offs soon thereafter. Female participation in middle and senior management roles is disproportionately low—and these trends are not adequately explained by the life and family choices that many professional women feel compelled to make. If one looks at the C-suite and boardrooms, the trend is even more disconcerting—and more global.

Lauri Rosendahl, president of Nasdaq Nordics, led the event with a stirring keynote that laid out the issue for businesses:

Nasdaq believes in a fair, transparent, and accessible market, so we also support businesses and cultures that aspire to the same standards. There have been many studies that illustrate the real and lasting bottom-line value of a gender-diverse workplace. Gender diversity often produces gains in productivity, talent recruitment and retention, and sourcing innovation. And this trend exists at all levels of the organization, including senior management and boards.
Other addresses followed, each attempting (in its own way) to explain why the numbers are so disproportional and point towards a potential solution.
  • Romanian Secretary of State Sorana Baciu talked about her own rise through the government ranks and the curious importance of social outrage—in her case over a tragic fire in a poorly regulated music venue—to drive public engagement and government intervention.
  • Sarah McPhee talked about her tenure as the CEO of Storebrand, a large and very traditional financial services company based in Norway. Despite leading the company, McPhee still encountered patches of outright discrimination. She stated her belief that quotas are a useful tool to bring short-term parity, but perhaps not the best methodology over the long-term. Norway itself has a 40% male-female diversity quota requirement for public company board participation.
  • RobecoSAM CEO Michael Baldinger touted his new gender equality impact equities fund, which provides investors with “exposure to a concentrated, high conviction portfolio of global companies that are leaders in promoting gender diversity and equality.” This strategy directly addresses societal inequity, but success is measured against the balance of the MSCI World Index.
  • Mats Andersson, CEO of the Fourth Swedish National Pension Fund (AP4), recalled a career full of provocation and engagement: from orchestrating decarbonization efforts and emissions disclosure to expanding the fund managers’ definition of fiduciary duty.
Turning towards the gender dynamics in the US, North Carolina state treasurer Janet Cowell discussed navigating the tension between directing long-term investment dollars ($90B and counting) towards long-term-worthy companies without taking a stand on the values that those companies may espouse. It is difficult, she conceded, to focus on “long-termism” without explicitly targeting diversity, environmental, or even governance performance.

Other panel discussions focused on specific research—such as the recent Gender Folklore in the Workplace paper from State Street—and specific tactics, including recruitment and retention, mentorship and training, and monitoring and addressing unconscious bias.

The final word was delivered by Anders Thorendal, chief investment officer from the Church of Sweden, stating that investors need not choose between sustainable practices, such as diversity mandates, and competitive returns. In fact, Thorendahl argued, diversity outperformance creates market outperformance.

Attendees and organizers gather by the Stockholm market bell just outside the auditorium

Attendees and organizers gather by the Stockholm market bell just outside the auditorium

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding sector performance and specific companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
Publication Date*: 5/18/2016 Identification Number: 1219 Mailto Link
Frequently Asked Questions
  Study on Sustainability Disclosure Standards
Identification Number 1205
Study on Sustainability Disclosure Standards
Publication Date: May 17, 2016

Global Reporting Initiative, the international sustainability standard setter, and RobecoSAM, an investment specialist focused exclusively on sustainability investing, teamed up to publish Defining What Matters: Do companies and investors agree on what is material? This paper is intended to provide a blueprint to help investors and companies connect sustainability priorities with long-term corporate strategy.

Publication Date*: 5/17/2016 Identification Number: 1205 Mailto Link
Frequently Asked Questions
  Leaning In to Diversity through Board Refreshment
Identification Number 1160
Leaning In to Diversity through Board Refreshment
Publication Date: April 20, 2016

This article is third in a series tackling the challenges and payoffs of improving board diversity.
Board refreshment has fallen squarely into the crosshairs of virtually every stakeholder in corporate governance, from investors to regulators to board members themselves. Concerns range from board tenure to over-boarding to intellectual obsolescence.

There is ample evidence of the increased focus on board refreshment. For instance, starting this year, proxy advisory firm ISS will note in its reports if a director is serving on more than five public company boards and starting in February of 2017 will recommend against directors who sit on more than five. ISS further recommends that CEOs sit on no more than two outside boards. Beginning in 2017, Glass Lewis’ recommendations will be consistent with ISS.

Investors also cite concerns that director independence is being compromised by tenures without term limits, questioning whether a board member who has been in place longer than 10 years is capable of independence of thought. Investors are adopting specific voting policies to catalyze board refreshment.

In an interesting twist, board members themselves are citing concerns with peers, specifically that aging board slates and homogenous board composition are breeding group think and vulnerability in areas such as risk management and cyber security. PricewaterhouseCoopers reported in its 2015 Annual Corporate Directors Survey that nearly 40% of board members say someone on their board should be replaced due to aging, unpreparedness for meetings and/or lack of expertise. Not surprisingly, younger and minority board members are calling for the refreshment of peers.

U.S. boardroom composition is changing in the face of these pressures. According to 2015 Equilar Blog, the average age and tenure on Fortune 100 boards has decreased during the past 5 years, from 66 to 63 years and 9.2 to 8.9 years, respectively. As board seats held by older men open up, many see an opportunity to close the gender gap on boards by filling vacant seats with women. This is the exact point that Nasdaq’s Blake Stephenson made in a recent blog post, noting that “As directors depart U.S. public company boards to satisfy these [ISS] policy recommendations - leaving space for fresh talent - perhaps now is the prime opportunity to diversify board composition, and to do so with relative ease?”

Certainly the business case for gender parity is building. In Gender Diversity and the Value in ‘Refreshing’ Boards, Diane Holt Frankle of Kaye Scholer reports that gender diversity creates “creative abrasion.” This is defined by Linda Hill of Harvard Business School as “a marketplace of ideas developed through debate and discourse.” Hill believes that companies “rarely get innovation without diversity and conflict.” A token female isn’t enough; companies with multiple female directors report that adding more than one woman on a board creates a dynamic open to disparate points of view.

Perhaps the greatest obstacle to gender parity in the C-suite isn’t a corporate culture issue but rather a vacuum of women in the c-suite and middle management. There is a perception and concern that as corporations compete for a limited pool of seasoned female executives to round out board composition over-boarding may become a problem.

The science of building the pipeline of women executives continues to be refined. McKinsey & Company, in a study created in collaboration with, highlighted three common pipeline pain points for women executives:
  • unable to enter the industry;
  • stuck at the middle the industry; and
  • locked out of the top of the industry.
Their research suggests that “leaders can cut through the complexity of the problem by first establishing priorities linked with their organizations’ most pervasive talent-pipeline problems.” Several case studies mentioned illustrate ways corporations identified and addressed their executive pipeline pain points.

Despite the perception that the pool of female executives is limited, Equilar Blog reported recently there are a number of corporations that stand out as leaders in making gender parity a priority and now have boards with upwards of 30% or more women occupying seats, including a number of Nasdaq-listed companies:
  • Navient Corporation (NAVI) where women occupy 54% of board seats
  • Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) where women occupy 50% of board seats
  • Netflix, Inc. (NFLX) where women occupy 33% of board seats
  • Pinnacle Entertainment, Inc. (PNKZ) where women occupy 29% of board seats
Smaller corporations and newly-public companies are typically less gender diverse. The 2O2O Women on Boards Gender Diversity Index reported that within the 2015 Fortune 1000, 199 companies had joined since 2010. Of these, the percentage of board seats held by women was only 13.5%. Many companies go public without a single woman on the board.

As corporations review board refreshment policies and procedures, it’s important to explore tactics to address gender diversity—including ways to step outside traditional methods and criteria to find and vet qualified women directions.

Read the studies and publications referenced in this article:

Nasdaq MarketInsite: Don’t Go Overboard! Are Your Directors Serving on Too Many Boards? >>

Nasdaq Governance Clearinghouse: It’s Time to Lean in to Board Diversity >>

Nasdaq Governance Clearinghouse: Leaning In to Board Diversity through Disclosure >>

PricewaterhouseCoopers: 2015 Annual Directors Survey >>

Kaye Scholer: Gender Diversity and the Value in ‘Refreshing’ Boards >>

Equilar: The Changing Face of Fortune 1000 Boardrooms >>

McKinsey & Company: Breaking Down the Gender Challenge >>

2020 Women on Boards: Gender Diversity Index >>

Publication Date*: 4/20/2016 Identification Number: 1160 Mailto Link
Frequently Asked Questions
  Why ESG Investors Matter?
Identification Number 1161
Why ESG Investors Matter
Publication Date: April 1, 2016

We recently spoke with Evan Harvey, Director of Corporate Responsibility at Nasdaq, about the benefits of attracting and retaining investors that are focused on environmental, social and governance (ESG) performance. Evan directs the sustainability effort at Nasdaq, helping to make the exchange and all of its listed companies more transparent, efficient and responsible.

Q: Why should publicly traded companies care about courting ESG investors?

A:  ESG transparency puts you in touch with investors who look at the long-term goals and strategies of the company, who are much more willing to stick with you through a bad quarter or even a bad year—if they believe in the long-term strategy.  ESG investors tend to be much better informed about the company’s operational efficiencies and their performance targets. 

It’s no longer just the Socially Responsible Investors or the sustainability-minded investors that are going in this direction.  And it’s not only pension funds, like CalSTRS and CalPERS and places like that.  BlackRock and State Street, for example, are part of a very large group effort called Principles for Responsible Investment. This represents 1,300 signatories (including very large institutions) that have publicly pledged to press for better ESG disclosure and performance at all of the companies that they hold. 

Investors want to know about long-term remediation for supply chain risks, proper management of energy and resources, and operational cost efficiencies around social and governance procedures.  These are all things that make a big difference when attracting long-term investment dollars. 

There’s also a real cost associated with managing shareholder turnover. The less you have to chase new shareholders every week or every quarter, the more your IR and legal team can focus on core business matters that are less temporal in scope. 

Q: How does a publicly traded company go about attracting ESG investors?

A: If you are disclosing through the Carbon Disclosure Project, or through the Global Reporting Initiative, or if you’re a FASB company, or United Nations Global Compact company – or any of these frameworks that facilitate disclosure of sustainability metrics—the investors will find you. 

Investors might have serious questions about the data, so you have to be prepared for a frank discussion. You should know if the data accurately reflects the entire organization. Your numbers should be auditable and third-party defensible.  If you get into a conversation that goes beyond marketing and PR, you want to provide good information because investors are risking real dollars.

But you can get to a fairly basic level of competence in sustainability reporting without a lot of cost, without a lot of resources.  Nasdaq managed to get to a basic level of competence and engage with the right partners without expending a lot of money or resources. 

Q: Given that the investment community at large is perceived as suffering from “short-termism” what are the strategic advantages to focusing on investors with a long-term view?

A: The pool of investors who care not a whit about ESG is dwindling and the pool of investors that care a lot about it is growing.  So, you’re playing to an ever-smaller audience if you are not engaged on this topic. 

If you’re a consumer-facing brand, and value being portrayed as sustainable and having a good track record, there are real and substantial strategic advantages to integrating this kind of thinking into your corporate structure.  Sustainability isn’t just about how much energy the company used last year or if the data center is powered by solar. Sustainability creates internal dynamics that are provocative and interesting.  It enables you to put two pieces of data together that might never have been compared.  Once you start syncing financial and “non-financial” data, you’ll find all kinds of insights. 

Consider the modern large corporate supply chain.  If a company can implement and track a supplier code of conduct, one that promotes good standards and provides some cover from bad ones, the number of suppliers goes down. That’s easier to manage, costs less, and probably makes the procurement process more efficient. Taking a supply chain from 5,000 vendors down to 500, while simultaneously affiliating your company with responsible suppliers, has a definite financial impact.

Q: What companies are doing a good job of incorporating ESG into strategy now?

A: Consider a company like Intel. They made a commitment to get conflict minerals out of the supply chain, to cleanse their manufacturing process and it wasn’t entirely driven by outside regulation like Dodd-Frank.  It was also driven by industry—in their case, an industry group called the Electronics Industry Citizenship Coalition (EICC). The EICC (a group of computer and technology manufacturers including Microsoft, Cisco, and Intel) created a voluntary industry standard in terms of how members run their businesses and responsibly manage the materials that they use.  There was so much negative media attention on conflict minerals that the industry just decided to act. It’s compelling that a company as large and established as Intel, within a few short years, almost completely eliminated conflict minerals from their supply chain. 

I think investors are attracted to the better public story, but they also look at that and think, “that’s a company with a nimble and effective management structure.” If they can set a goal and achieve it on that kind of scale in a few years, then who knows what else they’re knocking it out of the park on? 

Q: Tell us about the World Federation of Exchanges recommendations for implementing sustainability policies? 

A: WFE member exchanges advocate on behalf of their issuers, providing guidance and expertise in many areas. The public disclosure of sustainability data is one of these areas. Many companies already do this well; they’ve created a transparent ethos and frequently engage with stakeholders on long-term strategy. Other companies do considerably less, either because they don’t see the value or don’t have the necessary resources.

So the stock exchanges work together to make things better.  The United Nations Sustainable Stock Exchange initiative, the UN SSE, put out a document in September of last year that succinctly made the case for stock exchanges to get more involved.  Exchanges want our listed companies to survive and prosper in a resource-constrained environment, and we believe that many companies can engage with investors and stakeholders in a mutually advantageous way.

The World Federation of Exchanges Sustainability Working Group also researched and published a list of sustainability metrics to consider.  It did so by looking at existing sustainability frameworks in the world, and existing exchange guidance, and finding the most common denominators. Ultimately it boiled a list of 100-plus indicators down to about 34 recommendations, covering environmental, social, and corporate governance categories.  The emphasis is on transparency; allowing engagement on the good and bad measurements.  This can serve as a starting point for companies looking to enhance their disclosure.  Your company is at least on the record.  You are putting the numbers out there, and opening up a dialogue with investors who may have avoided your company in the past.

Q: What would be the first steps for a newly listed company to begin focusing on, and disclosing, their ESG strategies?

A: You have to know what the numbers are, even if you choose not to be transparent or publicly disclose this information, you should be managing it internally.  Somebody somewhere should have a dashboard with these metrics on it and it should help drive corporate decision-making. And this is more obvious to a leadership generation that is data-driven, dashboard-centric, that wants to compare disparate metrics and find new insights. So, the idea that a disclosure framework is forcing you to do all this extra work is a bit of a stretch, because most companies are gathering this data in-house already.  Somebody somewhere has got this information. 

But the decision to disclose can be difficult. Companies have to see the value in attracting investors that are going to stay for the long term. Sometimes that requires leaders to look beyond short-term goals and quarterly projections. This is about value creation that truly endures.

Publication Date*: 4/1/2016 Identification Number: 1161 Mailto Link
Frequently Asked Questions
  Leaning In to Board Diversity through Disclosure
Identification Number 1162
Leaning In to Board Diversity through Disclosure
Publication Date: February 9, 2016

This article is the second in a series tackling the challenges and payoffs of improving board diversity.

As the business case for diversity in the boardroom solidifies—and social pressures to improve gender parity escalate—investors and legislators alike are calling for the SEC to enhance mandated disclosure requirements about board diversity.

Last March nine pension fund fiduciaries filed a rulemaking petition with the SEC requesting disclosure on board directors’ gender, race, and ethnicity in proxy statements, and for the information to be presented in a chart or matrix format. Interested persons can comment on the petition, and SEC officials say they intend to consider the petition as part of an ongoing effort to review all disclosure requirements.

Shortly after the rulemaking petition was filed, Congresswoman Carolyn Maloney commissioned a study on corporate board diversity from the Government Accounting Office (GAO). In January of this year, she shared the results of the GAO study (Strategies to Address Representation of Women Include Federal Disclosure Requirements), citing that “the United States lags behind other industrialized nations” in the percent of board seats held by women. Maloney announced her intent to introduce new legislation modeled after corporate diversity policies in Canada and Australia.

While several countries in the EU have improved gender parity through mandatory quotas, the GAO study reported that U.S. corporate stakeholders reject such one-size-fits-all approaches. Quotas have become an even harder sell in the U.S. recently given the strides that Great Britain has made through a well-coordinated effort within the business community to meet voluntary diversity targets.

A majority of the U.S. corporate stakeholders interviewed in the GAO study support more robust SEC disclosure requirements (like those requested in the aforementioned rulemaking petition). Enhanced disclosure reporting would:

  • Provide standardized data for companies to benchmark and measure against goals
  • Bring transparency to diversity ratios and the board nomination process
  • Encourage reluctant boards to make diversity a priority internally
Congresswoman Maloney’s legislation would go a step further, instructing the SEC to recommend strategies for increasing women’s representation on corporate boards, and require companies to comply with those recommendations or explain why they have not. The GAO report shared a number of potential strategies—identified by stakeholders interviewed in the study—that corporate boards could potentially adopt to improve gender parity:

  • Require a diverse slate of candidates to include at least one woman
  • Set voluntary diversity targets
  • Expand board searches beyond the traditional pool of CEO candidates
  • Expand board size to include more women
  • Adopt term or age limits to address low turnover
  • Conduct board performance evaluations
It remains to be seen whether Congresswoman Maloney’s legislation will be adopted or what diversity improvement strategies the SEC would ultimately recommend that corporations pursue. However, there can be little doubt in light of recent events that pressures to improve federal diversity disclosure requirements will continue to mount—and corporations are advised to begin preparing accordingly.

Read the full GAO report Strategies to Address Representation of Women Include Federal Disclosure Requirements >>

Read Congresswoman Carolyn Maloney’s press release Maloney unveils new GAO report showing rampant disparities against women in corporate boardrooms, demands SEC take action >>

Read the Petition for Amendment of Proxy Rule Regarding Board Nominee Disclosure—Chart/Matrix Approach >>

Read the first article in this series: It’s Time for Companies to Lean In to Board Diversity >>
Publication Date*: 2/9/2016 Identification Number: 1162 Mailto Link
Frequently Asked Questions
  It's Time for Companies to Lean In to Board Diversity
Identification Number 1163
It’s Time for Companies to Lean In to Board Diversity
Publication Date: January 7, 2016

This article is the first in a series tackling the challenges and payoffs of improving board diversity.

Diversity in the boardroom continued to spark in-depth conversations during 2015, as numerous studies published in the U. S. and abroad touted the business case to improve boardroom diversity and analyzed why progress (in most cases) is maddeningly slow. The good news: where serious efforts are underway, gender diversity is improving. In this first installment, we highlight key takeaways from those reports that stood out from the plethora of research on this issue. We anticipate board diversity will remain a hot topic in 2016, as corporate sustainability continues to be a prominent concern of organizations around the globe.

Recent studies highlight how much farther corporate America must go to achieve gender parity in the board room. Deloitte Global’s Women in the Boardroom: A Global Perspective found that women currently comprise 18.7% of seats on S&P 500 boards. 2020 Women on Boards’ 2015 Gender Diversity Index is somewhat more encouraging: in 2015 women cracked the 20% threshold for the first time and now occupy 20.1% of Fortune 500 board seats.

According to Women in the Workplace, a study published jointly by Lean In and McKinsey & Company, it will take 25 years for the U.S. to reach gender parity at the senior VP level and a full century to reach it in the C-suite. The McKinsey study dissected the myths and obstacles that hinder corporate America’s efforts to improve board diversity.

The most immediate obstacle to improving gender diversity in the boardroom is bench strength. Women continue to be underrepresented within the executive level pipeline–and even more so in the C-suite—making the search for qualified female board members who aren’t already committed elsewhere a challenge. (The shallow female executive talent pool is a top concern shared by virtually all countries striving to improve corporate diversity metrics.)

A more intangible—but no less daunting—hurdle is inherent cultural bias. Unconscious bias negatively impacts hiring and promoting of women, causes disconnects in men’s perception of the challenges women face in climbing executive rungs, and limits sponsorships and networking opportunities for women trying to reach the C-suite.

The U.S. lags significantly behind Western Europe in gender parity metrics in the boardroom. While several countries in the EU have legislated mandatory quotas, the United Kingdom stands out for dramatically improving gender parity through voluntary targets.

According to the 2015 Women on Boards Davies Review, in four years the UK more than doubled the percentage of women occupying board positions of FTSE 100 companies (which increased from 12.5% in 2011 to 26.1% in 2015). Lord Davies was so encouraged by this rapid progress he is now urging British boards to aim for 33%. In their review, Lord Davies and his taskforce outline the tactical grassroots campaign they executed to exceed their initial target of 25%.

Britain’s Women on Boards campaign utilized many of the same solutions that McKinsey and Company recommends in A CEO’s guide to gender equality. Both this guide and the Davies Review offer actionable strategies to overcome inherent cultural bias, build a top-quality female executive pipeline and engage key stakeholders in the executive leadership community.

The movement to improve board diversity has captured the attention of the investment community as the business case for gender parity clarifies. Additionally, social pressures to reform are beginning to mount; a call to consider quotas is beginning to sound in the U.S. and even in the UK as well despite the significant progress shown there on a voluntary basis.

Identifying and shifting inherent biases within an organization is no easy task. But there is an encouraging refrain echoed by corporations that increased their participation of women on boards: once an organization moves beyond a “token” woman and appoints several women or more, the benefits to boardroom chemistry and dynamics are noteworthy. These corporations are realizing improved profitability and sustainability as a result.
Publication Date*: 1/7/2016 Identification Number: 1163 Mailto Link
Frequently Asked Questions
  Sustainability and Financial Markets
Identification Number 1193
Sustainability and Financial Markets
Publication Date: October 1, 2015

On September 18th, at the annual meeting of the Business Law Section of the American Bar Association, Evan Harvey, Nasdaq’s Director of Corporate Responsibility and David Strandberg, Chief Counsel in Nasdaq’s Listing Qualifications department, participated in a Panel entitled “Sustainability and the Financial Markets.”

Also on the Panel were Doug Park, Director of Legal Policy and Outreach at the Sustainability Accounting Standards Board (SASB); Sarah Bostwick from the United Nations Global Compact (UNGC); and Laurence Hazell, Director of Governance at Standard and Poor’s Ratings Services.
Among topics highlighted by the Panel included the work and initiatives undertaken by:

  • UNGC ( to encourage businesses to adopt sustainable and socially responsible policies around sustainability,

  • SASB ( to develop sustainability accounting standards to help public companies disclose material, decision-useful information to investors,

  • The World Federation of Exchanges ( working group on Sustainability and Global Exchange Security, both chaired by Nasdaq,

  • UN’s Sustainable Stock Exchange (SSE) initiative (, of which Nasdaq is a founding signatory,

  • S&P’s Ratings Services to incorporate sustainability related considerations in governance ratings, and

  • Nasdaq to promote issues around sustainability, including outreach to listed companies, webinars, events at MarketSite in Times Square and development of sustainability related “green” indices.
Publication Date*: 10/1/2015 Identification Number: 1193 Mailto Link
Frequently Asked Questions
  Adena Friedman Addresses Diversity & Inclusion
Identification Number 1194
Spotlight Promo
Adena Friedman Addresses Diversity & Inclusion
Publication Date: September 23, 2015

Nasdaq will co-host a symposium on Gender Equality in the C-Suite and Boardroom, on November 10th, at the Hyatt Regency Hotel in Chicago. This is the first in a series of events, designed to break barriers and accelerate understanding around gender equality in corporate leadership.

The Chicago program will convene more than 100 institutional shareholders, capital markets leaders, diversity officers, corporate directors and sustainability professionals. The day’s agenda is filled with ground-breaking panels and facilitated breakout sessions on key drivers of value.

Adena Friedman, who rose through the corporate ranks from intern to her current role as President of Nasdaq, will be the featured keynote speaker. Other speakers include North Carolina State Treasure Janet Cowell and Teresa Younger, President and CEO of the Ms. Foundation for Women.

Nasdaq is pleased to offer our listed companies a 50% discount on registration for this program. To secure your discount, please contact Jon Scorcia at or call +1.914.552.9106.

To learn more about this program and claim your Nasdaq company discount >
Publication Date*: 9/23/2015 Identification Number: 1194 Mailto Link
Frequently Asked Questions
  Corporate Sustainability: Sustainability Reporting Frameworks & Advocacy Groups
Identification Number 1195
Corporate Responsibility
How to Choose a Sustainability Reporting Framework
Publication Date: July 30, 2015

The sheer number of investor advocacy groups, analysts, experts, academics, and non-governmental organizations (NGOs) in the space can be daunting. Companies often ask: Which one is the most reputable? Which one gets the attention of investors? Do we have to report the same data in several different places? Do we have to fill out the entire questionnaire?

For a company just beginning their sustainability journey, I would focus on the five organizations listed below. They have the longest experience in the space, the most direct and substantive engagement with stakeholders, or the kind of reputation and reach that makes them unavoidable.

  • The Global Reporting Initiative (GRI) offers perhaps the broadest and most deeply researched sustainability reporting framework in the world. Launched in Boston in 1997, the GRI is now headquartered in Amsterdam, which gives some indication of its global reach and history of engagement with investors. The current version of its framework, G4, came out two years ago.

  • The Sustainability Accounting Standards Board (SASB) was born out of responsible investment research at Harvard University, but is an independent 501(c)3 non-profit. Not a framework per se, SASB focuses on developing and distributing a small number of sustainability indicators that are industry- and sector-specific. SASB believes that this kind of sustainability reporting is not optional, but fundamentally material (as defined by the U.S. SEC) and thus part of a company’s existing regulatory burden.

  • The International Integrated Reporting Council (IIRC) has created a framework that seeks to integrate sustainability performance metrics and “traditional” financial metrics in a single corporate disclosure. The Integrated Report specifies a unified corporate narrative without segregation of “non- financial” metrics like ESG.

  • The Climate Disclosure Project (CDP) focuses almost exclusively on climate reporting, energy strategy, and climate change.

  • The United Nations Global Compact (UNGC) asks companies to publicly endorse and operationally integrate a 10-point policy, covering human rights, labor standards, environmental actions, and anti-corruption.

Other Interested Parties

More and more groups are getting involved in the corporate sustainability conversation, stimulating a debate that impacts individual investors and global markets. Regulators in Europe and Asia have issued requirements for more detailed sustainability reporting from public companies. One recent EU rule, for example, requires large companies to include environmental, governance, and diversity disclosures in its annual report (NFR Directive, 2014). France just issued guidance for sustainability reporting by investors, meaning: institutions and fund managers would be required to disclose any investment holdings in fossil fuels or other carbon-based assets.

Stock exchanges are increasingly involved as well. There are mandatory listing requirements related to sustainability already in place in Brazil, South Africa, India, and Singapore, and more seem to be on the way in emerging Asian markets. Large exchanges are cooperating in working groups to create smart and practical sustainability disclosure guidance for listed companies. Nasdaq leads the two most prominent efforts: the sustainability working group at the World Federation of Exchanges and the Sustainable Stock Exchanges Initiative at the United Nations.

Investor advocacy groups are also heavily involved. The UN-backed Principles for Responsible Investment, for example, is an advocacy group that has grown to include 1,400 signatories representing more than $59T AUM. PRI signatories are committed to engaging with their investment targets to improve a wide range of ESG issues.

Publication Date*: 7/30/2015 Identification Number: 1195 Mailto Link
Frequently Asked Questions
  How to Get Your Company's Corporate Responsibility Program Started?
Identification Number 1196
Corporate Responsibility
How to Get Your Company’s Program Started
Publication Date: June 29, 2015

The practice of sustainability goes by many names in the corporate space, and the labels that we use to describe related activities can sometimes obscure the value and purpose of a good sustainability program. Generally speaking, a corporate sustainability program has three major components: environmental responsibility, social performance, and corporate governance.

In fact, many companies broaden the scope of their program even more - calling it Corporate Responsibility - because it also covers philanthropy, education, grant-making, employee volunteerism, and other community support initiatives.

Three Key Building Blocks: Strategy, Reporting and Engagement
Whether you design an all-encompassing program or one tailored to a small number of specific corporate objectives, the three phases of development include strategy, reporting, and engagement.

Strategy. At first, companies must learn more about their operation, target the most inefficient areas for improvement, and track the ongoing performance of the project. A company that wishes to improve its bottom line by becoming more environmentally responsible, for example, would begin by calculating its energy usage, researching the sources (and costs) of the energy it consumes), and finding new sources that generate savings. Understanding the current state, no matter how dire, is essential to planning a path forward-and that is the root of any strategic goal.

Reporting. Companies have to find the data that both reveals past performance and provides measurable ways to trend it into the future. Some sustainability metrics are well established and fairly easy to quantify: greenhouse gas emissions, the number of vendors in your supply chain, the amount of employee turnover in your business. Others can be more difficult to measure, but it still must be done. There are many sustainability frameworks available to help companies find the right data metrics (called KPIs or “key performance indicators”), track them over time, and facilitate a comparison between your performance and that of your peers and competitors. Whether you choose to report sustainability data internally or externally is up to you, but the data inherent in any reporting process is an essential driver of strategy.

Engagement. If you decide to report your results publicly, and share both the good and bad aspects of your sustainability performance with investors, employees, and other stakeholders, there are real rewards. First and foremost, reporting companies are likely to attract longer-term investors and reduce their rate of shareholder turnover. Second, some evidence suggests that these companies attract deeper pools of talent and retain more of their workforce. Third, it may put your company ahead of any regulatory efforts in this area-and therefore become a real competitive advantage. And finally, there are tangible benefits to improving your brand reputation and corporate image in the public area.

Why Should We Bother?

Companies that do not manage sustainability metrics (or do not report them externally) are slowly becoming more and more marginalized. In 2012, more than half of the S&P 500 (53%) and Fortune 500 (57%) issued separate sustainability reports, up significantly from the previous year (G&A Institute, 2012). Today, more than 80% of Fortune 500 companies issue a sustainability report. Detailed corporate environmental, social, and governance data is now part of the Bloomberg data terminal. But it doesn’t stop with reporting: almost half of the chief executives polled in a recent survey said that they integrate sustainability drivers into “strategic and integral” parts of their business (McKinsey, 2014).

Executives are not in the habit of wasting money on projects that have no demonstrable return. And there is an increasing amount of evidence to suggest that good corporate sustainability strategy can be tied to many positive financial outcomes.

Publication Date*: 6/29/2015 Identification Number: 1196 Mailto Link
Frequently Asked Questions
  Board Diversity
Identification Number 1164
Board Diversity
Publication Date: June 29, 2015

10%  of Nasdaq-listed companies' boards, on average, are comprised of women

2,231 board seats are held by women on Nasdaq companies

556 Nasdaq-listed companies had at least two female board members

In Renée B. Adams recently published paper, Myths Facts About Female Directors, the author includes this as Myth #1: Popular boardroom surveys provide an accurate picture of women's relative underrepresentation. In fact, she asserts that survey data, to date at least, has focused almost exclusively on large companies and that it is necessary to also look at small companies in order to get a "true" picture. We agree, so in the coming months we will be taking a closer look at the gender composition data we have collected and report back with stratified information.
Publication Date*: 6/29/2015 Identification Number: 1164 Mailto Link
Frequently Asked Questions
  Nasdaq talks to . . . Anne Sheehan, Director of Corporate Governance for the California State Teachers' Retirement System (CalSTRS)
Identification Number 1189
Nasdaq talks to . . . Anne Sheehan, Director of Corporate Governance for the California State Teachers' Retirement System (CalSTRS)
Publication Date: June 29, 2015

Ms. Sheehan recently spoke with Nasdaq about the importance of diversity to board governance, why it's important that proxy disclosure include a matrix of the nominees' gender, racial, and ethnic diversity, as well as their mix of skills, and the challenges companies face in adding diversity to their board. Excerpts from this conversation follow.

Q:  How do you define diversity and how has that definition evolved over the past few years? 

A:   The traditional notion of diversity was in terms of gender and ethnic diversity. So while it does include the traditional definition when people bring up the word diversity, it really goes beyond that to bring in a diversity of experience, knowledge, background, and expertise into the boardroom of portfolio companies. That is really our focus as we look at the issue of diversity at CalSTRS.

Q:  Is capturing the diversity with respect to women, the first step? Currently, a lot of companies don't even specifically address gender diversity in their proxies let alone some of these other characteristics.

A:   Yes, it is one of the first steps because obviously it is the one of the easiest ones to capture, even if you just put pictures of board members in the proxy you can recognize who is male and female. And while we all think we've come a long way on the issue of diversity, the fact of the matter is that only 20 percent of say the Fortune 100 Companies have women directors. So it is one of the focus areas that we have, and it is one of the easiest ways for companies to benchmark and measure against their goals of increasing the diversity on their board. 

Q:  According to our own data analysis after this most recent proxy season, we found that only about 10 percent of the board at Nasdaq companies are comprised of women.  Does that number surprise you? 

A:   No, that does not surprise me because if you look many of them are tech companies. And while I hate to admit it, since it's my home state where many of these tech companies have started down in Silicon Valley, the number of women board members is low, but that’s why we want to bring attention to this issue and explain the importance of it to board governance. 

Q:  Why has board diversity become such a hot topic lately?

A:   There have been a number of studies, Credit Suisse, McKinsey and others have verified and documented that companies with at least 30 percent women performed better over the long run than those with all male boards. So while many people may look at us and say, this is a politically correct issue or a social agenda, it is actually a business imperative. 

Q:  Why is it important that the SEC amend the proxy disclosure requirements to require that companies disclose the nominee’s gender, race, and ethnicity, as suggested in your petition?

A:   I think transparency is good.  Disclosure is good.  I don't think in this country we are going to mandate quotas like they have done in other markets. It just isn't going to happen. It's not part of the American corporate governance psyche. But I think a good additional step would be greater disclosure about the diversity of corporate boards, which includes gender diversity. And that’s an easy step for boards to do. Obviously, it can be more difficult with respect to ethnic diversity in terms of their categorizations. But I think gender diversity and disclosure in the proxy of that diversity is a good first step. And then the shareholders can decide, do they think that is enough diversity on the board. 

Q:  Are there any companies in particular that already provide this kind of disclosure in their proxy that you would hold up as examples? 

A:   I think Microsoft does a good job on some of the disclosures of their board members. There are number of Nasdaq companies that I think do a good job. 

Q:  Where does your petition stand currently? 

A:   It's at the SEC now. We are busy garnering support for it. We have not heard anything formally from the SEC, but one good thing is that the SEC currently working on a disclosure project.  And so, we think that enhancing disclosure in the proxy statement fits right in with the goal of that project. 

Q:  Do you have any sense from companies about how difficult it would be to comply with the disclosure that you are recommending in the petition? 

A:   There are some companies that are already doing this so I think it would be easy for companies to comply with our proposal, if they looked at some of the models of the companies that do these grids now. 

I think some companies are fearful of litigation, but I think shareholders also recognize it as a point and time disclosure.  The litigation fear that concerns some companies isn’t so much about the gender or ethnicity issues, but some of the skills and experience in the grid. But we understand this is an evolving process, and people are gaining skills all the time. 

Q:  I understand a number of European countries have instituted a gender quota as a means to improve representation of women on corporate boards.  Has this approach been successful?  And do you think this has any momentum in the U.S.? 

A:   It has been successful because the threat of a sanction finding, which could result in a delisting. This has been quite a motivating factor to comply. It has been helpful in those countries.

It also helps when we talk about it in this country that, not so much the mandate of the quota, but that they are able to find candidates who are capable, experienced, and board ready to serve inside the boardroom. So that’s one benefit as we talk about this issue in our country. 

But, as I said before, I don't see mandating quotas getting traction in this country; just culturally it's very different.  Plus, I think you have to recognize that the markets are so much smaller in those countries where they have mandated this in terms of how many publicly listed companies there are in Norway or France. The number of public companies and the markets are very different here in the United States.  And then culturally from the governance perspective, it's also very different. 

Q:  Do you have any thoughts on the board diversity resolution passed by the Illinois House of Representatives?  Aren’t these resolutions largely ceremonial?

A:   I did see that resolution. California also has a similar resolution. It is not a binding law, but it is a goal that California companies have 30 percent of the board seats held by women. As I stated before, actual quotas are more difficult to implement here because of the way the markets work in our country.  However, it does bring attention to the issue and starts discussions inside the boardroom.

I would say these resolutions can be seen as somewhat ceremonial, but I do believe that the authors and the sponsors of these measures are very sincere. More importantly, it helps to bring attention to the issue, which is a good thing because it gets the discussion going on board composition, on the board agendas, and inside the boardroom. So while they may not be binding and really may not be practical because of the way our markets work in our corporate governance laws here, it is an important public step to bring attention to the issue. This is an issue that policymakers are looking at and focusing on. 

Q:  What are some of the challenges companies face in adding diversity to their board? 

A:   I think the biggest challenge really is the will to do it. Many times they will say they cannot find candidates, but we have proven that there are many good candidates out there. They need to look a little bit harder, work harder with their search firms, and get nominating committees to focus on recruiting these candidates. 

Q: Do you have any practical advice for companies that may help them find qualified directors that will add diversity to their boardroom?

A:   There are a number of steps the board can take. Most boards have the ability to increase the number of board slots. One thing that we have suggested is that if they don't currently have an opening to add a woman member if they have very little or no diversity on their boards.  And then, when the next person retires, just don't replace that person. Ask their search firms to always have a pool of candidates ready to appoint to the board in the event of an opening because things happen in life where openings can come very quickly. 

Many institutional investors are focusing more attention on this issue. They are focusing more attention on the composition of the boards because boards really are our representatives; they are shareholders representing us inside the boardroom. 

So as many large shareholders look at board composition diversity becomes part of that discussion. What you see now is that firms like BlackRock and others have signed on to the 30 percent club, which is an effort to try and get 30 percent of the board to be women over the next few years. 

Michael Bloomberg has also signed on to this initiative. You have a lot of business leaders who have leant their name to this effort to try and bring attention to this important issue. 

Q:  Finally, what can Nasdaq do to help listed companies? 

A:   As companies list, Nasdaq should discuss governance guidelines, best practices, and the importance of diversity on their boards. This is a business imperative that shareholders will be asking about. And if they don't hear it upon their IPO, they will hear it shortly thereafter if they don't have some diversity on their board. 

We think, as I mentioned earlier, this is a business imperative. Companies get better decision making inside the boardroom and a more robust discussion and perspective on issues. Men and women operate differently; they think differently, they bring different perspectives to the decisions that need to be made in the boardroom.  And we think the result of that diversity of thinking and the approach inside the boardroom is actually better for the company in the long run. 

We think it's a value-added proposition for these companies to consider as they are looking at putting together their boards when they come to list on Nasdaq. 

Q:  Do you think enhanced disclosure will encourage better behavior? 

A:   I do. I think it's a step. I think the shareholders need to push as do others for enhanced disclosure. Shareholders, I think, can play a big role in this especially the larger shareholders. All of us can play an important role. 

All of this goes without saying that the candidate/individual has got to be qualified.  I always hate to have to qualify that, but, of course, we want anyone who sits inside any of the boardrooms with the companies that we hold to be qualified and have the skills and experience necessary. 

Our point is there are women out there who have the qualifications, skills, and experience who are board ready. The boards just need to exercise the will to take the steps to act on it.
Publication Date*: 6/29/2015 Identification Number: 1189 Mailto Link
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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