I'm the Co-founder and CEO of The Grommet. We launch undiscovered consumer products. It's also the birthplace of Citizen Commerce. I write about design, cultural anthropology, and start-ups, mostly.

One step forward for our economy, two steps back

In all the excitement this month about the “Fearless Girl” statue installation and subsequent defilement, the real news seemed to be missed. People thought the statue was about generic feminism. Not exactly. The purpose of the statue was to mark a very powerful move by the index fund giant State Street Global Advisors. Namely, that they are going to start voting against companies who do not have a clear plan for increasing the gender diversity of the boards.

This might sound kind of esoteric and irrelevant to your daily life, but State Street’s investments are critical to 3,500 companies. They HAVE to listen to an investor with $2.47T in assets in their companies. Those companies employee a great number of Americans. State Street’s bold move will hopefully influence the other giants in index investing: Vanguard and Blackrock. Other firms that are highly influential in proxy voting for institutional investors ISS (Institutional Shareholder Services) and Glass Lewis might also be pressured to step into the 21st century. 

But wait, there’s more…we will likely see large institutional investment firms such as Fidelity (headed by a woman Abigail Johnson) and T Rowe Price also recognize their fiduciary responsibility to their investors in seeking to improve the performance and capabilities of their portfolio companies.

This is good for all: companies with diverse boards provide better returns and create healthier companies.

I’ve long watched despairingly at the glacial progress of getting women on boards, despite the proven hard core benefits of diverse governance. At our current rates of progress I will long be dead before we achieve gender parity. Yes, I will be dead. How depressing–at least for me! This action by State Street is the first major, systemic effort I have seen that gives me real hope.

Our current President is hyper focussed on increasing our economic growth rates and job creation. I am all for that. But when I look at the aggressively obvious lack of diversity of the most important “board” in our country, Trump’s Cabinet, I can see he hasn’t copped on to the best economic growth shortcut of all: women. A study by McKinsey Global Institute in 2015 that said if women took part in the economy in the same way as men, global GDP would grow up to $28 trillion a year, or by 26%, by 2025. (USA Today)

Beyond the 1950’s US Cabinet, the other massive step backwards for the health of our economy was the recently reported shrinkage in the amount of venture capital going to female founders. It was hard to imagine it going lower, but we sunk to 2.19% in 2016.  Yes, that rounds down to….zero.  I’ve written about why this matters to all of us, whether we want to found a company or not–here, here and here.

State Street is hardly seen as a radical activist company. They are hard core capitalists. And we need this kind of rational action as a counterbalance to the Neanderthal regimes occupying the White House and most VC partnerships–if we care about the future economy and companies we are delivering to today’s fearless boys and girls.

5 Responses to “One step forward for our economy, two steps back”

  1. Margaret McKenna

    Wow, Jules. Fantastic post. I had no idea.

    Can you change my email on your listserv to my gmail address, or is there a way for me to? M

    Sent from my iPhone

    >

    Reply
    • julespieri

      Margaret, I have no idea how to do this–I know you can follow the blog with your gmail address, but I don’t know how to nuke the old one. I will investigate…I never pay attention to the listserv.

      Reply
    • julespieri

      I figured it out and removed you from the email notifications list. Just refollow with your gmail and you should be good!

      Reply
  2. Margaret McKenna

    Jules, Steve says Blackrock has already done this….worth checking. M

    Sent from my iPhone

    >

    Reply

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