AP2 finds gender diversity takes backward steps at Swedish corporates

The proportion of female board members overseeing listed Swedish companies has edged downwards in the past year, back to 2022 levels. Only around 35.5 per cent of current board members on companies listed on NASDAQ Stockholm, the region’s biggest stock exchange, are female, according to SEK425bn (€37.9bn) Swiss buffer fund AP2’s Female Representation Index 2024.

“We have seen steady growth in the proportion of female board members since we introduced the Female Index in 2003,”says Eva Halvarsson, CEO of AP2.

“Unfortunately, the increase has levelled off in recent years and this year it is decreasing somewhat. The companies have some way to go to reach the goal of 40 per cent women on the boards.”

AP2 wants its listed holdings have at least 40 per cent of each gender represented on the board by 2030, and actively influences its portfolio companies to have a strategy for diversity, equity and inclusion (DEI).

“Diversity is an important issue for the fund and is one of five focus areas within sustainability. The fund’s starting point is that companies that work with diversity, equity and inclusion not only take sustainability issues very seriously but are also more competitive and thus create better value,” says Halvarsson.

Of the 356 companies examined in AP2’s Female Representation Index 2024, the number of female board chairpersons decreased from 34 to 32 – corresponding to just 9 per cent of listed companies having a female chairperson. The number of women CEOs also fell to 42 from 45, equivalent to 11.8 per cent of companies with a female CEO.

Nomination committees help

The survey revealed that companies with nomination committees have a higher proportion of women on the board than companies without a nomination committee. Companies whose nomination committees have female representation also have an average of five percentage points higher proportion of female board members compared to all-male nomination committees. At the same time, half of all nomination committees lack a female representative.

Positively, the proportion of women in listed companies working on management teams has increased, up from 26.4 per cent to 28.8 per cent. The number of women in management roles is at the highest level since the survey started in 2003 and signposts a rich base to recruit for more senior roles down the line.

“It is gratifying that our Female Index shows that the proportion of women in management continues to increase, which is an important factor for there to be a good recruitment base for female board members in the future,” says Halvarsson.

The largest proportion of female board members is found  in the finance and telecom and media industries. Materials industries and consumer discretionary sectors are at the bottom, with less than 30 per cent women.

The survey found most women in management positions in real estate, healthcare and services industries, while the lowest proportion is found in sectors including energy, where only one in five people in management roles  are women.

AP2 compiles its Female Representation Index internally. The 2024 survey included 356 primary and secondary listed companies on Nasdaq OMX Stockholm. In addition, the survey records the proportion of women who have graduated from study programmes that constitute the traditional recruitment base for management groups and boards.

Diversity, equity and inclusion are integrated into AP2’s investment strategy.  The buffer fund has developed a multi-factor index for internally managed foreign equities and corporate bonds that integrates various ESG factors including equality and the percentage of women in the company. The index is expected to generate higher returns at lower risk, while taking sustainability aspects into account.

“There are indications that the factor of the proportion of women in the company, from a global perspective, has contributed to a positive return in the Fund’s multi-factor index for foreign equities. The effect has been stronger in developed markets compared with emerging markets,” says the fund.

In the Fund’s model for analysis and evaluation of private equity companies’ sustainability practices, these practices are assessed on the basis of 25 assessment points that include diversity and inclusion.

AP2 also engages through dialogue with companies concerning selection processes for boards and management teams.