InvestmentsSep 6 2021

Why there are too few senior women in financial services

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Why there are too few senior women in financial services
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Ann Cairns, the north east of England-born executive vice chairman at Mastercard, says the factors that may be contributing to this issue in the world of fund management are prevalent across many other industries. 

In addition to her role at Mastercard, Cairns is global chair of the 30% club, an initiative that campaigns for female representation on boards to be at least 30 per cent.

She says progress has been made on that front, but the wider diversity challenges that remain are much more deep seated and cultural.

She says: “When we launched the 30% club, female representation on FTSE 100 boards was 10 or 11 per cent, and now it is over 40 per cent. But the issue is there are not that many female chief executives, or female chief financial officers. Even though there are more CEOs than in the past, and more CFOs.”

Cairns says part of the problem is that “relatively few women, even senior women in these companies, have jobs that come with responsibility for the profit-and-loss account".

She adds: "There is a lot of clustering in certain other positions, perhaps such as HR, but the chief executives tend to be chosen from the ranks of the finance directors and others with P&L responsibility.”

Cairns says the clustering is the result of issues that begin before women ever enter the workforce.

She says: “While there is some issue around the number of girls doing [science, technology, maths] subjects at university, the issue actually begins much earlier than that. The problem starts when girls are 12 years old, and must choose the subjects they want to study.

"There is an issue around Stem subjects not being seen as cool. At Mastercard we have a global  campaign to address this, with targets we need to hit. Quite simply, in a world of 5G and quantum computing, we need more women Stem graduates.” 

School daze 

Cairns herself is a graduate in maths and statistics. In her previous at the company  role she was responsible for all of Mastercard's activity outside the US. Now as executive vice chair she represents Mastercard around the world, focusing on  inclusion, diversity and innovation. 

Prior to her current role, Cairns worked on the team that helped to wind up Lehman Brothers' international operations when working for management consultancy company Alvarez and Marsal. 

Among the non-executive directorships she currently holds at sevral corproate firms and the Department for Business, Energy and Industrial Strategy. 

For those who do pursue Stem subjects, the next stage where a blockage occurs, according to Cairns, is when women reach their mid-30s. She says data shows women lose thousands in pay for every child they have, which does not happen for men.

Cairns adds: “This is another point where the issue happens. In terms of management, women don’t even get on the first step of the ladder. I think equal paternity and maternity leave is one way to help address that.”

She says the pandemic has exacerbated many issues, with women bearing more of the load of educating children while working from home. But the problem is spread across a huge number of sectors in the economy. Cairns adds that “data shows that even in academia, the number of papers produced by women during the pandemic fell relative to men”.

Elisabeth Scott, chair of the Association of Investment Companies, a trade body, says it is really encouraging to see the progress made in recent years in improving the diversity of investment company boards, but recognises there is still further to go.

She says: "We strongly believe that increased diversity of backgrounds and experiences on boards leads to more diversity of views and better decision-making, which ultimately benefits investment company shareholders. We expect these trends to continue.”

Cairns says the data, compiled by consultancy McKinsey, shows that more diverse boards make better decisions, with diversity of background, ethnicity and gender all contributing. 

French fund house Mirova is aiming to put this theory to the test with its Women Leaders Equity fund. 

The fund invests only in companies it believes are on a path to achieving gender balance, using its own qualitative data. Investments in the fund must also screen as sustainable.  

The company’s chief executive Philippe Zaouati says: “We believe that investors – both institutional and individual – are looking for clear investment solutions with a proven impact which are based on a strong economic rationale. Strategies addressing diversity and gender equality fit into this category perfectly. These issues are a social and an economic priority.”  

Cairns says having more diverse boards may mean, in the shorter term, that decision-making takes longer, but says the decisions are likely to be of a higher quality due to the presence of people who think differently from each other.

She says: “I think of it as if the population of the world was divided randomly into green and red groups. And then you had to choose a team to save the world. You wouldn’t choose just from the red or green group to save the world. That would be illogical.” 

The role of non-executive directors on investment trust boards is to act in the interests of shareholders. Scott says attracting directors from as wide a pool as possible helps ensure boards perform this role effectively – and with this in mind, the organisation has created an initiative to help trusts source directors from a wider pool of talent. 

Andrew Ninian, director of Stewardship and governance  at the Investment Association, another trade body, says: “Diversity results in better decision-making and plays an essential role in a company’s long-term success. The Hampton-Alexander Review has played a pivotal role in driving up the number of women on boards in the UK's largest companies, but companies should not view the end of the Hampton-Alexander Review cycle as an end to investor focus on diversity.

"It is vital that this momentum is maintained and that investors continue to hold companies to account. That's why this year we continued to push for progress with Ivis, the IA’s Institutional Voting Information Service, giving companies whose board comprises of 30 per cent or less female directors a ‘red-top’ – an increase on last year’s 20 per cent threshold.”

David Thorpe is special projects editor of FTAdviser

david.thorpe@ft.com