Legal & General Group PLC (LON:LGEN) is pressuring fellow FTSE 100 companies to diversify their upper management.
The life insurer issued an ultimatum to the over 30 big caps with all-white boards unless they appoint a black, Asian and minority ethnic (BAME) director by January 2022.
The firm, which manages over £1.2 trillion of assets, wrote to all 100 companies in London’s leading index as well as all those in the S&P 500 saying they should have at least one BAME director by that date, The Times reported.
L&G, which owns 2-3% of almost all the largest stocks in the UK, warned it will vote against the re-election of the nomination committee chairmen if the firms do not comply.
The nomination committees are those responsible for hiring senior executives.
“The horrifying killing of George Floyd and so many others has led many institutional investors to think much more seriously about structural racism and inequality,” L&G was reported as saying.
Diversity pays
Liberum analyst Joachim Klement told Proactive that, at least in terms of gender, board diversity is a benefit for companies.
According to an analysis by the broker, London-listed companies with a more gender-diverse board of directors had higher operating margins, lower share price volatility and higher share price returns, outperforming their peers by 3.4%.
A more diverse management team also provides better oversight over executives, bringing different experiences and knowledge to make strategic decisions and dealing with risk.