"Fearless Girl" Sponsor State Street Drops Boardroom Diversity Targets

State Street Global Advisors (SSGA), the investment management arm of State Street Corporation and the sponsor of the iconic "Fearless Girl" statue, has announced a shift in its approach to boardroom diversity. The company, which previously used its proxy voting power to influence change in corporate governance, will no longer set specific targets for the number of women on corporate boards. This decision comes amidst an evolving market and regulatory environment, as well as changing client preferences.

The "Fearless Girl" campaign, launched in 2017, aimed to increase gender diversity on corporate boards by pressuring companies to add more women to their boards. The campaign was successful in raising awareness and encouraging companies to take action, with 301 companies adding at least one woman to their boards as a result. However, State Street has now decided to broaden its focus beyond boardroom diversity targets and concentrate on broader ESG integration and engagement with companies on a range of sustainability and governance issues.

Several factors contributed to State Street's decision to drop boardroom diversity targets. Firstly, regulatory pressure from the U.S. Securities and Exchange Commission (SEC) regarding investor activism has led asset managers to reassess their engagement strategies. Secondly, client preferences have shifted towards segregated mandates and world-class asset managers, with a focus on core investment management services. Lastly, State Street's commitment to ESG integration has led the company to broaden its approach to sustainability and governance, focusing on a wider range of factors that contribute to long-term value creation.

The market and regulatory environment has evolved significantly since the launch of the "Fearless Girl" campaign. There has been an increased focus on ESG investing, regulatory changes promoting gender diversity on corporate boards, and a rise in shareholder activism. These developments may have influenced State Street's decision to adopt a more proactive approach to promoting gender diversity and shift its focus to broader ESG integration.

State Street's decision to drop boardroom diversity targets has potential implications for other institutional investors and their approach to corporate governance. Increased pressure on companies to improve boardroom diversity, a shift in investor expectations, collaboration among investors, regulatory influence, talent attraction and retention, and potential backlash are all possible consequences of State Street's actions.

In conclusion, State Street's decision to drop boardroom diversity targets reflects the company's commitment to ESG integration and its clients' preferences. The evolving market and regulatory environment, as well as changing client preferences, have influenced State Street's shift in policy. The potential implications of State Street's decision on other institutional investors and their approach to corporate governance are significant, with the possibility of increased pressure on companies, a shift in investor expectations, and collaboration among investors.