FTSE Russel: All ‘No gender pay gap’ portfolios outperform

Rick Steves

While the gender pay gap has been a persistent issue in the labor market over the decades, the report found that pressure from investors, customers, and government regulation is having a positive effect on gender pay gap reporting as companies look to improve their ESG performance and scores.

Refinitiv has published ‘The Gender Pay Gap and your Investment Strategies’, using ESG data and several FTSE Russell indices.

The report led the company to conclude the importance for a company to address the gender pay gap for several reasons:

In some jurisdictions, equal pay is the law.
Lower pay for women affects pension contributions and financial stability for many families now and later in life.
Professional performance and relationships may be negatively affected.
Employee churn rates may be higher.

David Craig, Group Head, Data & Analytics, Chief Executive Officer at Refinitiv, LSEG, commented: “Though we continue to see more companies disclosing gender pay gap data in 2020, both disclosure and performance have a long way to go before we see the gender pay gap vanishing. Our ESG data and research show that closing the gender pay gap is not idealistic, nor is it a nice to have, it is a business imperative for companies of all sizes and geographies.”

While the gender pay gap has been a persistent issue in the labor market over the decades, the report found that pressure from investors, customers, and government regulation is having a positive effect on gender pay gap reporting as companies look to improve their ESG performance and scores.

Company disclosure continues to rise, with 748 companies disclosing gender pay gaps in 2020, a 10% increase from 678 firms the year before.

Refinitiv combined its ESG data with several FTSE Russell indices and found that all ‘No gender pay gap’ portfolios outperform those with a gender pay gap.

“Stand-out industries in our ‘No gender pay gap’ portfolios are Technology Equipment and Software & IT services. Examining countries in our ‘No gender pay gap’ FTSE Europe portfolio, we found that Germany has the biggest presence in the portfolio (21.66%), followed by Switzerland, Russia and the Netherlands.

“We found that companies in the FTSE Asia Pacific Index with no gender pay gap to have cumulative returns that outperform by a spread of 55.10% when benchmarked against all companies with a negative pay gap for women in the same index.”

UN report: Women hold 20% board seats, 5.5% chair, and 3.5% CEO positions, in G20

The United Nations Sustainable Stock Exchanges initiative (UN SSE) reviewed 2,200 companies to look for gender gaps. Gender equality is one of the 17 Sustainable Development Goals agreed to by UN member States.

The research showed that women hold 20% of Board seats in G20 markets, 5.5% of Chair and 3.5% of CEO positions in G20 markets.

The document found 6 out of 22 markets have rules requiring a mandatory minimum number of women on corporate boards
Stock Exchange specific data. Euronext Paris (France) has the highest percentage (44.3%) of women on boards of all G20 markets.

Johannesburg Stock Exchange (South Africa) has the best gender balance on boards (28.5%) of any developing country in the G20. Shenzhen Stock Exchange (China) has the most female CEOs (11 out of the top 100 companies) of any G20 market. Australian Stock Exchange (Australia) has the most female Chair-persons (14 out of top 100 companies).


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