Nine large public pension funds asked the SEC on Tuesday to require companies to disclose more about their boards’ diversity.
In a letter signed by officials from California, North Carolina, Ohio, Illinois, New York and Connecticut representing $1.12 trillion in investment assets, the pension funds called on the Securities and Exchange Commission to update its board nominee disclosure rules in order to help investors determine whether there is an appropriate mix of skills and backgrounds. “Better disclosure will lead to better investment decisions,” said North Carolina Treasurer Janet Cowell, sole trustee of the $88.8 billion North Carolina Retirement Systems, Raleigh.
The group called on SEC officials to update existing rules by requiring companies to create a chart or matrix of each nominee’s gender, race, ethnicity, skills, experiences and attributes. Citing more robust disclosure regimes in Australia, Canada, Singapore and the European Parliament, the group said that greater disclosure can prevent “groupthink.” The SEC’s 2010 amendments on disclosure show “no meaningful increase in diversity on corporate boards,” the letter said, adding that shareholder proposals will continue to press the case as well.
“As investors, we need better information on the makeup of our portfolio companies’ boards so we can assess whether they're prepared to meet challenges or are letting groupthink creep in,” said New York state Comptroller Thomas P. DiNapoli, who is sole trustee of the $181.7 billion New York State Common Retirement Fund, Albany.
In addition to Ms. Cowell and Mr. DiNapoli, the letter was signed by William Atwood, executive director of the $19.2 billion Illinois State Board of Investment; Karen Carraher, executive director of the $90 billion Ohio Public Employees Retirement System; Denise Nappier, treasurer of Connecticut and trustee of the $29.4 billion Connecticut Retirement Plans & Trust Funds; Scott M. Stringer, New York City comptroller and pension fiduciary of the $163.4 billion New York City Retirement Systems; Anne Sheehan, director of corporate governance for the $190.8 billion California State Teachers’ Retirement System; Anne Simpson, director of global governance for the $301.7 billion California Public Employees’ Retirement System; and Theresa Whitmarsh, executive director of the $104.5 billion Washington State Investment Board.