As International Women’s Day highlights female economic empowerment and encourages companies to prioritize diversity in recruitment, we explore how investors can benefit from focusing on female representation.
International Women’s Day (IWD) offers investors a chance to assess the role of gender equality and diversity in their portfolios. The 2025 IWD theme, ‘accelerate action’1, encourages businesses to address gender imbalances in areas like recruitment and leadership.
Investors are increasingly recognizing the value of gender equality and diversity in driving better returns while achieving social impact. Research shows that companies with a forward-thinking approach to diversity, particularly in board and senior leadership roles, tend to outperform their peers.
Meanwhile, regulators are pushing companies to improve gender equality in management teams. In Europe, the Gender Balance on Corporate Boards Directive1, effective from 2024, sets a target for publicly traded businesses to have at least 40% female representation among non-executive directors, or a minimum of 33% across both executive and non-executive directors, by mid-2026.
Progress is being made, especially in larger European firms. Data published in February 2025 showed that women held 43.4% of board positions among the UK’s 350 largest listed companies in 2024. Among the G7 nations, only France, at 45.4%, has a higher level of female representation.
How to benefit from the diversity dividend
In 2019, Nordea Asset Management (NAM) launched the Global Diversity Engagement Strategy to capitalize on growing awareness of diversity and inclusion. The strategy focuses on investing in companies that lead in gender equality and diversity, while also engaging with those at earlier stages of their diversity journey to help accelerate progress.
The Strategy is a global equity portfolio with an added social engagement layer. Stock selection is based on NAM’s Multi Asset Team’s quantitative model, which filters the most compelling investments using factors such as quality, value and momentum, relative historical profitability.
The Strategy evaluates companies using a “diversity overlay,” that assigns a score based on four criteria: leadership diversity, talent pipeline, inclusion efforts, and diversity change. Companies are then categorized as Diversity Leaders (advanced in diversity metrics), Fast Movers (needing further support), Moderate Improvers (with potential for growth), and Diversity Laggards (showing little progress). To qualify for investment, companies must meet specific thresholds, such as a 30% + minority gender representation in senior management or a minority gender as CEO/board chair, with the possibility of lowering this threshold to 20% for companies showing clear progress.
The value of engagement
This system helps determine whether NAM, through our Responsible Investments team, should engage with a portfolio company. We believe that firms classified as diversity leaders, which make up about 50% of the portfolio, need no external support or engagement.
For fast movers and moderate improvers, we view engagement as a key part of our role. It enables us to assist companies in developing and implementing diversity policies by sharing best practices and identifying key challenges.
Our engagement follows NAM’s ‘four milestones’ approach. The first involves communicating our expectations to senior management. The second milestone is when the company understands and is willing to act on these expectations. The third requires the company to take concrete steps or commit to doing so within a set timeframe. The final milestone is when the company achieves the goals we initially set.
By expanding our investment universe in 2023 to include businesses still progressing in diversity and inclusion, we can invest in the diversity leaders of the future, increasing the social impact of the strategy.
Engagements at work*
In August 2023, we began working with Torex Gold, a mid-sized Canadian mining company, whose progress in diversity has been largely driven by the CEO, emphasizing the importance of top-level commitment for successful change. Our engagement focused on maintaining these diversity values and ensuring ongoing progress, regardless of leadership changes. Torex Gold has demonstrated strong commitment by formalizing responsibility and disclosing gender pay gap and equal pay policies. While not an industry standard, this transparency has helped attract more female talent.
Among the diversity leaders in our Global Diversity Engagement Strategy is US-based homebuilder, Taylor Morrison Home Corporation. Despite the traditionally male-dominated industry, the company has achieved gender balance at all levels, including the board, executive, middle management, and workforce. Their focus extends beyond gender to include age, nationality, and ethnic diversity, better reflecting America’s diverse homebuying population. The company’s dedication to inclusivity is evident in initiatives targeting diverse talent acquisition, expanded data disclosure, and fostering a culture of belonging.