BOSTON (Reuters) – Top mutual fund manager Vanguard Group Inc will ask companies about the gender, age and race of their directors, adding pressure on U.S. companies to diversify their leadership.
Vanguard gave the guidance in its annual stewardship report released on Friday morning. With about $5 trillion under management and known for products like the Vanguard 500 index fund (VOO.P), the firm wields much influence over executives and directors at major U.S. companies.
“We are expanding our focus to more explicitly urge boards to seek greater diversity across a wide range of personal characteristics, such as gender, race, ethnicity, national origin, and age,” Vanguard wrote.
In addition to diversity measures, Vanguard asked boards to spell out their views on diversity, to broaden their search for minority candidates, and “to prioritize adding diverse voices.”
Pressure has grown on U.S. companies to bring more women into senior leadership roles in recent years. It has been hastened by the #MeToo movement, a response to accusations of sexual assault and harassment in Hollywood and elsewhere.
Investors have not been as focused about adding minorities, however, and their gains have lagged.
Vanguard stopped short of seeking director-by-director details from companies, saying in its report it wanted descriptions at least on an aggregate basis. Other companies have gone further and detailed the specific race and gender of directors such as at Regional Management Corp (RM.N).
Glenn Booraem, Vanguard’s top stewardship officer, said the company is more concerned with understanding boards’ overall diversity.
“Who checks the box on various personal characteristics isn’t the important thing for us,” he said in an interview.
Vanguard also gave details in the report about its proxy voting during the 12 months ended June 30. Among other things, Vanguard said it voted against 585 members of compensation committees who did not respond to shareholder feedback, and that it supported seven of 49 shareholder environmental proposals, a rate similar to the prior year.
Growing investor concern about environmental, social and governance issues has led fund firms to put more attention on the topics. On Monday, Vanguard’s index fund rival BlackRock Inc (BLK.N) outlined how it cast more votes against chief executives serving on outside boards.
Reporting by Ross Kerber; Editing by Peter Cooney and Jonathan Oatis