AXA's investment arm takes companies to task over diversity

By Sinead Cruise and Simon Jessop

LONDON (Reuters) - AXA Investment Managers will vote in protest against companies which do not explain how they will boost the number of women on their boards, joining growing demands for workplace diversity.

AXA IM, one of Europe's biggest fund managers and part of French insurer AXA Group (AXAF.PA), said the move followed five years of unsatisfactory private engagement with firms considered to have too few, if any, female decision-makers.

"We are using our influence as investors through our engagement activities, to address this (diversity) in all markets, developed and emerging," Shade Duffy, Head of Corporate Governance, told Reuters.

"We will vote against all-male boards where there is no communication of plans to seek to appoint women to the board in the near future," AXA IM's Duffy added.

This reflected its global commitment to improving diversity among the hundreds of companies it owns stakes in, as part of a bigger plan to drive greater innovation and spur higher returns.

As of April 30, the number of 'oppose' votes AXA IM has logged in annual shareholder meetings this year has risen to 25 from 1 last year, as a result of the new policy.

The protest covers shareholder resolutions, ranging from votes against the Annual Report and Accounts to the re-election of the chairman or the chairman of the nominations committee.

Duffy declined to name the firms AXA IM has opposed, pending communication with the relevant companies and directors.

"Our aspiration here (is) not just about leadership or the visible face of a company - it is about the broader workforce and the progression of women to roles where they can influence strategy and performance," Duffy said.

"The board is just the tip of the iceberg," she added.

News of AXA IM's voting intentions comes as executives face investors at annual general meetings, a forum for raising concerns about the way a company is run or is performing.

It follows a similar move by Legal & General Investment Management (LGEN.L), one of Britain's biggest money managers, which last month said it would vote against chairs of boards which had fewer than 25 percent female membership.

A law introduced last year in Britain requires companies and charities with more than 250 workers - covering almost half of its workforce - to report their gender pay gap, which in Britain stands at 18.4 percent.

DIVERSITY PREMIUM

AXA IM has a tradition of pushing companies to consider reforms that promote better working conditions, greater care of the environment and improve public health.

In 2016 it became the first major fund firm to announce it would ban all new investments in the tobacco industry, which led to a 1.8 billion-euros sell off of tobacco bonds and stocks.

That followed a 500 million euro (441 million pounds) divestment from companies with a high involvement in coal-related activities in 2015, in line with the wider group's corporate responsibility strategy on climate change.

AXA IM also launched a fund in February 2017, led by Anne Tolmunen, which it hopes will demonstrate how companies with stronger gender diversity can deliver higher returns.

The AXA WF MiX in Perspectives Fund is targeting outperformance of the MSCI All Country World Index by selecting global companies who have at least 20 percent female representation at board and executive level and a broader commitment to achieve gender balance across their workforces.

Atlas Copco (ATCOa.ST), Facebook (FB.O), Microsoft (MSFT.O), Statoil (STL.OL) and Bank of America (BAC.N) are among the AXA WF MiX fund's top 10 positions. At the end of March, it had delivered a 12.8 percent return since its launch.

(Reporting by Sinead Cruise and Simon Jessop; Editing by Alexander Smith)