The Fearless Girl

The sculpture, titled “The Fearless Girl,” was made by Kristen Visbal and photographed by Federica Valabrega.

State Street Global Advisors conspired in the middle of the night to drop a statue in Bowling Green Park of a girl facing off against the famous Wall Street Charging Bull. It’s part of a campaign by SSGA to emphasize that companies with women in top positions perform better financially.

SSGA manages nearly $2.5 trillion for institutional investors, predominantly in index funds. It has the power to exert enormous influence if it chooses to do so.

“State Street Global Advisors is issuing new gender diversity guidance to the more than 3,500 companies we invest in across three major regions (US, UK and Australia), designed to increase the number of women on corporate boards. As one of the largest investment managers in the world and a significant shareholder we believe that board diversity enhances board quality and effectiveness as it brings together directors with different skills, backgrounds and expertise.”

SSGA is bringing the hammer:

“In the event that companies fail to take  action to increase the number of women on their boards, despite our best efforts to actively engage with them, we will use our proxy voting power to effect change — voting against the Chair of the board’s nominating and/or governance committee if necessary.”

One compliance concern is SSGA’s role as an investment adviser, and therefore a fiduciary. SEC rules give advisers great latitude to set its own proxy voting policy. See Rule 206(4)-6. I would assume from the press release that SSGA has implemented a new written proxy voting policy. I expect that we will see a new description of the policy in the Form ADV filing later this month.

SSGA pulled together research to show that having more women on boards is a better financial choice for companies. MSCI ESG Research’s research shows that companies in the MSCI World Index with strong female leadership generated a Return on Equity of 10.1% per year versus 7.4% for those without (as of September 9, 2015, measured on an equal-weighted basis)