CPP Investments' updated diversity guidelines to impact Asia boards

An update to the Canadian pension fund's proxy voting guidelines on gender diversity in corporate boardrooms will affect emerging markets, including Asia.
CPP Investments' updated diversity guidelines to impact Asia boards

Canada Pension Plan Investment Board (CPP Investments) plans to update its proxy voting principles and guidelines (PVPGs) for 2023, with an eye on furthering its advocacy of greater gender diversity in corporate boardrooms.

The change will affect the Canadian pension’s investments in emerging markets, including Asia.

Companies will need to have at least two women on boards in emerging markets, an increase from a minimum of one previously, according to the new guideline.

This policy applied only to the United States, developed Europe, Australia, New Zealand and South Africa until now. 

CPP Investments works to a rounded 30% of female directors on boards in developed markets. 

The change is set to be announced this week.

"The escalation is going from one to two [women directors on the board] and it is our long-term expectation that we will align our expectations of emerging market companies with those of developed markets,” Richard Manley, chief sustainability officer at CPP Investments, told AsianInvestor.

Richard Manley
CPP Investments

This is a significant step by the $394 billion Canadian pension fund to advocate for more gender diversity in emerging markets, including Asia, where company boards still lag in the representation of women.

“In many Asian companies, where there are no female directors or where there is just one, we want to be very clear in signalling to boards that one female director is not enough.”

The pension fund had previously signalled that it would extend its voting principles regarding gender diversity on boards to more countries.

CPP Investments introduced its board gender diversity voting practice in Canada in 2017.

The guidelines are not rigid and consider a company's specific circumstances when CPP Investments votes on a company issue.


Over the past few years, investors and regulators across Asia have increasingly focused on improving corporate gender diversity, often starting with board gender diversity.

Regulators in Asia are increasingly mandating disclosure and even board gender diversity quotas.

For instance, the Hong Kong Exchange introduced rules in late 2021 to end “single-gender” boards, while a 2021 update of the Malaysian Code of Corporate Governance requires all boards to comprise at least 30% women directors, a December 2022 report by Asia Securities Industry and Financial Markets Association noted.

India’s 2013 Companies Act also made it compulsory for all publicly listed companies to have at least one female director.

CPP Investments’ changes to its voting principles, in order to improve gender diversity on the boards of the companies it invests in, are part of this broader trend.

“I think it’s fair to say that this policy change will impact hundreds of companies across markets,” said Manley.

The Canadian pension had about C$145 billion (US$107 billion) in Asia Pacific across all asset classes, with about C$60.9 billion (US$44.8 billion) in public equities.

Women continue to be underrepresented in many company boards. Credit: Shutterstock


PVPGs are approved annually by CPP Investments' board of directors.

The PVPGs have two purposes: to give the directors and officers of companies in which CPP Investments owns shares, indication on how it will vote on matters put to shareholders; and to communicate its views on important issues that boards deal with in the normal course of business.

With Covid-19 fears receding and face-to-face meetings once again possible in several markets, CPP Investments believes now is the time to push ahead on board diversity.

“The operating environment is only becoming more complex, and that basically increases the value of ensuring strategic debates and decisions are informed by more diverse perspectives in the boardroom,” said Manley.

“We’ve given companies a year’s notice and our investment teams have engaged with portfolio companies and telegraphed the changing expectations. Some companies have, in the last year, added an extra female director to their board, although for some of those companies, that was just the underlying direction of travel for them.”

In situations where the Canadian pension fund engages with a company and is in direct dialogue with the nominating committee chair, and there is an active search for a female director, that fact will be reflected in the Canadian pension fund’s voting.

If a board has no female directors, CPP Investments will oppose the election of the chair of the board committee responsible for director nominations, assuming there are no extenuating circumstances, according to the fund's PVPGs.

It will also consider voting against the entire committee responsible for director nominations, or where appropriate, all incumbent directors, if sufficient progress on gender diversity is not made in subsequent years.


Other asset allocators have also been pushing for greater gender diversity on company boards as part of their shareholder voting policies.

Jane Ho
BNP Paribas AM

“Female board representation lags in Asia, partly due to cultural reasons — we acknowledge and incorporate this into our voting policy through a lower threshold for this region," said Jane Ho, head of stewardship Asia Pacific at BNP Paribas Asset Management.

"We actively engage with Asian companies on this subject and do evaluate them on a company by company basis, making exceptions to our policy for those that are making significant efforts in terms of diversity.” 

Ho believes regulatory requirements will continue to play an important part, and that progress on board gender diversity in evident in markets such as Japan, Korea, and Hong Kong.


This story has been updated in 3rd and 5th paras.

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