Picture: 123RF/MARK BOWDEN
Picture: 123RF/MARK BOWDEN

Michigan, US — For the last five years, the national conversation about the lack of women or people of colour on US corporate boards has focused on the world’s biggest companies, with tangible results: in July, for the first time, every company in the S&P 500 had at least one female director.

At the other end of the spectrum, progress has been slower. In the Russell 3000 index of the 3,000 largest US companies, there are still more than 300 all-male boards.

A group of 11 pension and union funds with a collective $750bn in assets has picked up the mantle. Called the Midwest Investor Diversity Initiative, the group, which includes the United Auto Workers Retiree Medical Benefits Trust, the Illinois State Treasurer’s Office and the Ohio Public Employees Retirement System, is calling on small and mid-size companies across six Midwest states in the US to add women and people of colour to their boards.

So far, the group has persuaded two dozen companies to adopt a version of the US National Football League’s Rooney Rule to ensure women and people of colour are considered for open directorships. Ten boards have added new members as part of the process, according to data released on Tuesday. 

“We’re really one of the first investor coalitions in the country to include race and ethnicity in the push for companies to increase and enhance board diversity,” said Meredith Miller, chief corporate governance officer for the $61bn UAW fund.

The Midwest fund consortium focused on the companies where member investors could leverage direct and often long-standing relationships. Vehicle parts company American Axle, mall developer Taubman Centers and pharmaceutical company Assertio Therapeutics, for example, added directors and changed recruiting processes as a result. So far the group has engaged with about 40 companies and hasn’t yet had to force the issue with a proxy vote, Miller said.

The UAW fund started pushing all-male boards in Michigan to add women five years ago, and then worked to develop the broader regional focus on gender, race and ethnicity, Miller said. The UAW fund will target a new US region, yet to be announced, Miller said.

With James Calixto.