Rhode Island Treasurer Seth Magaziner, along with institutional investors from states across the region, today announced the Northeast Investors' Diversity Initiative (NIDI), a regional partnership dedicated to increasing corporate board diversity-inclusive of gender, race, and ethnicity-at companies headquartered in the Northeast.
"An increasing body of research shows that companies with stronger diversity at the senior level tend to outperform those companies that lack diverse leadership teams," said Rhode Island General Treasurer Seth Magaziner. "As long-term investors we believe that board diversity, inclusive of skills, gender and ethnicity is an important consideration as we work to protect shareholder value and maximize returns for our members."
With a total of more than $283 billion in assets under management, the investor coalition intends to leverage their corporate relationships and shareholder rights to encourage boardroom diversity and inclusion.
As policy, Rhode Island votes against all director nominees sitting on boards with less than 30% diversity on their board of directors, inclusive of gender and ethnicity. In 2019, Rhode Island voted against directors at seventy-three companies for lack of diversity.
Studies have shown that companies with more diverse executive teams are more likely to experience above-average profitability and outperform their peers with less diverse leadership. Modeled after the successful Midwest Investors' Diversity Initiative, the NIDI will engage mid-sized regionally-based companies on improving board diversity.
"As investors, we want companies-especially those in our backyard-to understand the critical role that good governance and diversity plays in maximizing returns," said Connecticut State Treasurer Shawn Wooden, whose office is leading the coalition. "Through the Northeast Investors' Diversity Initiative, we'll be able to focus engagement on companies in our region and support them with important tools to create more inclusive, effective boards that protect shareholder value."
The coalition also includes the State Treasurers of Massachusetts, Maine and Vermont; the New York City Comptroller and New York-based Miller/Howard Investments; Massachusetts-based Boston Trust Walden, Trillium Asset Management, and Zevin Asset Management; and New Hampshire-based Pax World Funds.
Among other best practices, the NIDI recommends companies adopt a diverse search policy known as the "Rooney Rule." Borrowed from the NFL diversity policy, the Rooney Rule would require female and minority candidates to be included in the initial pool of candidates considered for an open corporate board seat.
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