State Street Calls For More Women On Boards

State Street Calls For More Women On Boards

Cyrus Taraporevala’s latest letter to CEOs lays out a new priority in proxy voting strategy.

Reviewed by: Dan Mika
Edited by: Dan Mika

State Street Global Advisors is warning its portfolio companies that it’s prepared to use the proxy voting power of its $1.1 billion in ETF assets to make sure at least one woman is on every corporate board.

In a letter to CEOs Wednesday, SSGA CEO Cyrus Taraporevala said his company will expand its expectation for board composition from only major indexes in select markets to every company in the asset manager’s portfolio.

State Street will also expect companies in major indexes covering the U.S., Canada, United Kingdom, Europe and Australia to have at least a third of their board seats held by women and reiterated a policy position made last year that said it would vote against board directors at S&P 500 and FTSE 100 companies that don’t have at least one person of color on their board or decline to disclose their board’s racial and ethnic makeup.

“In each instance, we are prepared to vote against the Chair of the board’s Nominating Committee or the board leader should a company fail to meet these expectations,” Taraporevala wrote.

Additional ESG Concerns

The firm also said in its letter that it will expect companies in major indexes to reach certain emissions disclosure targets and will launch an engagement campaign specifically pressuring the 40 to 50 largest emitters in particular industries to disclose more information on their climate transition policies.

The mandate extends one of the most expansive deployments of proxy voting power from a member of the so-called “Big Three” asset managers—State Street, Vanguard and BlackRock. For its part, BlackRock is beginning to allow larger clients a say in proxy voting this year.

Ben Colton, State Street’s global head of asset stewardship, declined to specify how many of the firm’s approximately 13,000 portfolio companies don’t have at least one woman on their board.

Companies have raised concerns about the monthslong timeline of searching for qualified candidates in response to State Street’s previous requests for board diversity in the past few years. However, the asset manager appears ready to push the matter to the forefront of board discussions.

Diversity Improves Performance

“We do think that the conversation has been going on for many years, and that companies have had time to improve their nomination processes and really vet qualified candidates,” Colton said.

State Street’s efforts to use its proxy power may encourage other institutional investors to follow suit, said Anat Alon-Beck, a professor of corporate law at Case Western Reserve University.

She has previously argued that asset managers have a fiduciary duty to their clients to push for diversity at the board level because they are often dominant shareholders in a given company. She points to research suggesting companies without diverse boards underperform compared to their more diversely governed peers and are more likely to succumb to groupthink and other hindrances to effective corporate governance.

Asset managers also have to back up their pledges to support diversity and equality movements made en masse after the murder of George Floyd sparked a wave of anti-racism protests in 2020, Alon-Beck said.

“I do think they have a fiduciary duty to focus on corporate cultures of diversity and equality, and they have the power to bolster governance,” she said. “With power comes responsibility.”


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Dan Mika is a reporter for He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.