This editorial was originally published in FA Online, April 26, 2018.
There was a time when I regularly quoted a well-known statistic that one third of women and girls experience sexual assault from an unknown or known perpetrator in their lifetimes. At the time, that percentage seemed pretty high. And then #metoo happened. The more I heard stories from women—personal stories or stories circulated through social media and then the mainstream media—the more I realized that it was the rare woman or transgender person who I knew or knew of who hadn’t experienced sexual or gender-based violence.
So here we are, in a time where social media has finally made evident the extent of the problem. How did we get here? How is it that the systematic cover-up of violence and abuse in society and in companies is so pervasive?
In a recent article published by Cornerstone Capital Group (where I work), my colleagues Emma Currier and Sebastian Vanderzeil noted that sexual and gender-based violence may present a material risk to companies and industries in three key areas:
- negative productivity impacts;
- restricted social license to operate; and
- consumer action.
Simply put, violence and harassment in the workplace is bad for business. When allowed to run rampant, it can lead to greater turnover and lower performance. It can also create tension with the communities in which businesses work when management is perceived to be complicit with perpetrators and noncompliant with local customs and laws. And, as we have seen with the Weinstein empire and others, when it comes to companies that fail to create inclusive cultures and address harassment, consumers are quick to abandon brands, a phenomenon that is growing thanks to the prevalence of social media.
But there is something that can be done. Shareholders and investors can insist that the companies in which they are invested disclose critical information that will bring to light corporate practices and cultures related to sexual and gender-based violence. Unfortunately, this is easier said than done due to the current state of reporting by companies on matters related to an array of issues that are important to women and others who experience marginalization. Consistent with broader corporate negligence around gender equality, there is a serious gap in corporate reporting on sexual harassment and violence, a gap that currently makes it very difficult to evaluate corporate behavior.
Given this urgent need for more disclosure, In the short run, investors should demand that companies disclose:
- Sexual harassment claims and companies’ specific steps to resolve the claims
- Initiatives to support victims in reporting sexual and gender-based violence
A handful investors are already taking significant steps toward aligning their investments with companies that disclose their practices related to equity and opportunity in the workplace. This is being made possible in part because of new efforts to systematically improve disclosure and reporting practices among corporations. For example, EquiLeap, an Amsterdam-based organization, measures gender equality in public companies against an extensive proprietary Equileap Gender Equality Scorecard, which looks at 19 different data points, including recruitment, training and promotion, the gender composition of management and workforce (gender balance being the ideal), fair wages and equal pay, family leave policies, work-life balance and supply chains. It also includes alarm bells to mark, and if necessary, to exclude companies that have cases taken against them or have been judged to be guilty of gender discrimination and/or harassment. The Equileap Scorecard is inspired by the UN’s Women’s Empowerment Principles, and looks at the workplace from a rights-based perspective rather than purely from a diversity prospective, which most gender-lens investment strategies focus on.
At Cornerstone Capital Group, we are also embedding a robust gender analysis into our investment review process given our clients’ interest in gender lens investing approaches that reflect their values and indeed that have the ability to change how corporations behave.
But we can’t do it alone or even with the limited number of investors who are committed to gender lens investing. We will only be successful in making the needed change that #metoo has given voice to if many more investors ask hard questions of their investment managers and the companies in which they are invested. Collectively we must demand more of companies and we must act to ensure that they take the basic step of disclosing the information that investors need to make informed decisions. Because if not now, when?
Katherine Pease is Managing Director and Head of Impact Strat