Editor: Shareholder activism has swept across public markets in recent years with regular rebellions over pay, environmental concerns, diversity and social factors all becoming commonplace (‘Shareholders stage AGM revolts against REITs’ executive pay plans’).
During the AGM season, we have seen repeated examples of asset owners’ huge power to hold management to account and drive positive change due to the fear they will vote against motions or capital will be allocated elsewhere.
Some companies have met this challenge head on. There are many examples of public companies, including real estate businesses such as British Land, leading the way on improving diversity and inclusion. Yet there has been a distinct lack of progress in private markets, particularly in real estate.
This has led to a yawning divide between private real estate companies and publicly listed ones. In private markets, the diversity of a workforce is too often relegated to a tick-box exercise for institutional investors – and the same attitude is mirrored by the companies that are courting capital from them.
All businesses should be taking responsibility for the ESG process, not just public companies, which are required to be more transparent. Investors must approach private investment with the same vigour and dedication to improving diversity as they do in public markets.
For real change to take hold, institutional investors – the gatekeepers of the world’s money – have a responsibility to drive change across their portfolios. This requires a meaningful conversation with clear goals and a pathway to achieving them.
The immediate expectation is not a 50/50 split between men and women, nor a perfectly representative workforce – the expectation is progress while recognising the compelling and proven financial benefits that a diverse organisation brings.
Kate Hammar, real estate practice leader, Per Ardua