- Despite a 30% quota for Supervisory Board diversity, German corporations continue to lag peers on gender diversity at senior levels.
- We engaged Germany’s largest listed companies on the lack of female representation at senior leadership levels, and their policies and measures to address this.
- Our engagement revealed more awareness on the issues than had been apparent from their public disclosure – but practice varies widely.
- Here we set out our best practice expectations on strategy and targets, flexible work arrangements, hiring procedures, gender pay gap assessments, employee surveys and education and training.
BMO Global Asset Management’s diversity engagement priorities
Diversity in Germany – Regulators press for action
Assessing best practice
Fig. 1 – Company rankings on awareness and flexibility
Based on our conversations, companies are doing more than their public reporting suggests. To better inform investment decisions, we continue to stress the relevance of enhanced disclosure.
Diversity in practice within the DAX30 companies
- Including diversity in KPIs for management board and regular staff to measure qualitative and quantitative progress, and link to bonus payments;
- Setting high targets for levels one and two below the management board, which ensure dedicated resources and a pipeline for management board positions;
- Including diversity as a core pillar of doing business in the company’s Code of Conduct;
- Tracking progress. For instance, DHL has developed a diversity dashboard, which monitors global diversity data; and
- Disclosing targets and progress made for a balanced gender mix e.g. MunichRe12.
- Not asking for previous compensation in the hiring process to eliminate gender-biased payments;
- Assigning salary bands based on experience and level of responsibility for each role;
- Compensation position surveys to understand the “market value” of specific positions and base compensation decisions on that; and
- Assessment and aggregated disclosure of global pay levels along full and part-time, seniority level and region.
Our expectation is that companies conduct an annual employee engagement survey that includes questions on the level of satisfaction of the company’s diversity efforts. We also expect companies to disclose externally the fact that they are performing these surveys, or otherwise, and provide aggregated results. This will help us to better understand the level of employee engagement and satisfaction, and whether any disruptions might be expected in the future.
All companies had performed one or several employee surveys in the past, but there was a varying degree of frequency, depth, engagement and disclosure.
The way forward
- BMO Global Asset Management ESG Viewpoint, ‘A focus on gender diversity”, March 2019
- Low engagement levels and high levels of dissatisfaction may indicate increase in turnover rates, related costs and business continuity risks.
- Later this year an ESG Viewpoint about our WDI-related engagement will follow. The WDI is an initiative to improve workforce data of listed companies, supported by more than 130 investors, with a combined AuM of around USD 15trn.
- As of August 31st 2019 the DAX30 are: adidas, Allianz, BASF, Bayer, Beiersdorf, BMW, Continental, Covestro, Daimler, Deutsche Bank, Deutsche Boerse, Deutsche Lufthansa, Deutsche Post/DHL, Deutsche Telekom, E.on, Fresenius, Fresenius Medical Care, Heidelberg Cement, Henkel, Infineon Technologies, Linde, Merck, Munich Re, RWE, SAP, Siemens, ThyssenKrupp, Volkswagen, Vonovia, Wirecard.
- Between 125-320€ per unfilled position
- E.g. Projektmanager (w/m/d)
- MSCI ESG, ISS. Company data as at April 2019
- E.g. acknowledgement of diversity benefits & own challenges, targets for board, c-suite and senior management, diversity concept broader than gender, anti-bias trainings, board responsibility for topic, sponsorship and mentorship programs, hiring procedures
- E.g. flexible work arrangements, child care facilities, parent-kid offices, part-time for senior roles, job-sharing options, worldwide staff assignments
- On Sep 5th, 2019 Thyssenkrupp had to leave the DAX30, and was substituted by MTU. Our analysis does not include MTU.
- As of Sep 18th, 2019
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.