(Bloomberg) -- Impax Asset Management moved swiftly last year to zero in on women’s job losses as the Covid-19 pandemic swept across the U.S.
Money managers at the firm reached out to corporate executives, asking them about their labor practices, with a particular focus on issues such as paid leave and flexible-work arrangements.
“Companies that prioritize achieving a diverse, balanced workforce with equal pay, as well as diversity and inclusion, are likely to emerge from the pandemic stronger,” Joe Keefe, Impax’s president, said in an interview.
Impax oversees the $800 million Pax Ellevate Global Women’s Leadership Fund, the U.S.’s largest gender-themed mutual fund. Its managers only invest in companies where women represent an above-average proportion of the executive committee or the board of directors. Its biggest holdings at the end of last year included Microsoft Corp., Amazon.com Inc., Estee Lauder Cos., Starbucks Corp. and American Water Works Co.
Now, Impax is among investment managers seeking to highlight that the inequalities deepened by the coronavirus aren’t only a crucial social problem, but also bad for business. Since last March, Impax has reached out to Albertsons Cos., Charter Communications Inc. and Waste Management Inc., among others, requesting information and conversations about what steps they’re taking to manage human capital in the medium- to long-term because of Covid-19. Each has been responsive, Keefe said.
Women and workers of color are experiencing the worst job losses as the coronavirus continues to rage. Female employment has declined 6.6% since the pandemic emerged last March, compared with 5.8% for men, according to the U.S. Department of Labor. Additionally, only 74.9% of prime-age women — those aged 25 to 54 who are most likely to have small children at home — are in the labor force, compared with 87.6% for men of the same age.
“Gender inequities have been laid bare by the pandemic,” Keefe said.
The Pax fund is the oldest of the gender-themed offerings, dating back to 1993, and bases its investments on the philosophy that companies with a more diverse group of decision-makers perform better over time. It has risen at an annual rate of 12.7% over the past five years, compared with the 14% advance of its benchmark, the MSCI World Index, including reinvested dividends.
The average company in the MSCI World Index has 29% representation of women in the boardroom and 20% in the executive suite. By comparison, an Impax global women’s leadership index is comprised of about 400 companies where women hold an average 37% of the board seats and 27% of the senior management positions.
Researchers at Morningstar Inc. track more than 20 gender-diversity funds globally that share similar characteristics to the Pax fund. The overall performance of the funds is mixed when compared with more conventional offerings. Some of the managers, like at Impax’s fund, speak directly with the companies, while others, like those with the Glenmede Women in Leadership U.S. Equity Portfolio, stick with a quantitative approach.
“We don’t talk to company managements, we look at the numbers,” said Val de Vassal, co-manager of the Glenmede fund.
He said the fund invests in large U.S. companies such as PayPal Holdings Inc., Davita Inc. and NetApp Inc. that are committed to advancing women. The companies must have a female chair or chief executive officer, or a board or senior management team with at least 30% women representation, plus a robust business outlook, he said. When the fund opened at the end of 2015, the rule was a 20% minimum for the board or senior management.
“While we try to take subjectivity out of the management of the portfolio, we also want to make sure we understand the broad scope of issues related to gender diversity,” De Vassal said. The $28 million fund rose at annual rate of 13.7% during the past five years, underperforming the 17% advance of the Russell 1000 Index.
Jennifer So, manager of the $77 million BMO Women in Leadership Fund, takes a more proactive approach than the Glenmede managers.
"We’ve been talking to all our companies about how they’re supporting employees with a focus on women during Covid," said So, adding that she has spoken in the past few months with the managements at companies including Microsoft and Verisk Analytics Inc., as well as officials at her own firm, Bank of Montreal.
She points to companies like Microsoft, one of her largest holdings, that have really looked after their employees during the pandemic. Microsoft has provided extended parental leave to help employees deal with childcare gaps during Covid-19 and initiated other programs to assist workers, she said.
Canadian National Railway Co., another of the BMO fund’s investments, recently formed an aboriginal advisory group to represent provinces across the country, So said. The group will make recommendations and meet four times a year with the CEO and board. The company also plans to have 50% women representation on its board, perhaps as soon as this year, she said.
So has been managing the BMO fund from Toronto since August 2018, and in that time, it rose at an annual rate of 10%, compared with the 8.9% increase of the S&P/Toronto Stock Exchange Composite Index and the 16% gain of the S&P 500 Index.
So also singled out Adobe Inc. as a top company from a gender-diversity standpoint. The software maker hires just as many women as men to entry-level positions, providing a robust pipeline for future promotion, So said. Currently, the company promotes 72 women for every 100 men. While that’s not parity, it shows how seriously Adobe takes the gender issue as employees “move up the ladder,” she said.
In December, Adobe said its female workers earn 99% as much as men, becoming the first major U.S. tech company to disclose worldwide median pay based on gender. For the U.S. as a whole, women earned about 82 cents for every $1 that men took home in 2019, according to the latest figures from the Bureau of Labor Statistics. In 1979, the first year in which this data were available, women’s earnings were 62% of men’s.
“The gap is narrowing, but it’s still too wide,” So said.
--With assistance from Catarina Saraiva.
To contact the author of this story: Tim Quinson in New York at [email protected]
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