The firm behind the “Fearless Girl” statue on Wall Street isn’t as into gender diversity as it claims, at least according to one measure.
The investment management company State Street Corporation has positioned itself as an advocate for women and gender diversity in corporate America in recent years. In 2016, State Street launched an investment fund devoted to gender-diverse companies, and the following year, it placed a statue of the Fearless Girl staring down the Charging Bull in New York City’s Financial District. (The Fearless Girl statue has since moved to across from the New York Stock Exchange a couple of blocks away.)
But according to a new report from the investment research company Morningstar, State Street might not be putting its money — or rather, its shareholder votes — where its mouth is on promoting women in the upper echelons of corporations.
Of the 10 times its gender diversity fund used its shareholder votes to weigh in on a gender diversity or pay equity proposal for one of the companies it invests in over a three-year period, the fund only voted in favor of the proposal twice. Six times, it voted against the proposal, and twice, it abstained. Morningstar compared it to two other gender-focused funds, the Glenmede Women in Leadership US Equity Portfolio and the Pax Ellevate Global Women’s Leadership Fund, which voted for diversity and pay equity proposals every time.
While it’s not the end of the world that State Street doesn’t always vote to support gender diversity, it’s not a great look, either. Investors in its diversity fund think they’re putting their money toward something they believe in, and it appears that’s not always the case.
It also makes the whole idea around the Fearless Girl feel like a bit of a fraud. Yes, the image of a little girl standing defiantly with her hands on her hips is evocative. But a corporation leveraging feminism for marketing feels pretty cynical, especially if it’s not advocating for women as much as it claims.
The Fearless Girl’s message isn’t necessarily a bad one, but it’s also important to remember what the statue is: a marketing ploy masked as a symbol of female empowerment.
What’s up with State Street’s votes
To back up a little bit, the fund in question is the State Street SPDR SSGA Gender Diversity Index ETF, better known by its ticker, SHE. An ETF is an exchange-traded fund, which invests in a basket of publicly traded companies; investors can then invest in it and trade it like a stock. Basically, the ETF invests in a group of stocks, and you and I buy into the ETF.
The basket of companies SHE holds are companies that fit its definition of gender diverse in senior leadership positions — right now, its biggest holdings are Johnson & Johnson, Home Depot, and Mastercard.
Shareholders in stocks of publicly traded companies have a certain set of rights related to that investment, including the right to vote on certain corporate matters, including members of the board of directors, executive pay packages, and questions related to diversity and pay equity. The SHE ETF is a shareholder of the companies it invests in, so it votes.
According to Morningstar’s tracking, from July 2015 to the end of June 2018, SHE voted on 10 shareholder proposals on diversity reporting, pay equity, and other gender-related measures. It only voted in favor of the proposals twice.
Some of the proposals State Street rejected didn’t get much support among shareholders in the first place. For example, it voted against shareholder proposals in 2016 and 2017 at TJX Companies, which owns brands such as T.J. Maxx and Marshalls, that would have required the company’s compensation committee to include diversity metrics among senior executives as a performance measure when setting the CEO’s compensation. The measure in both 2016 and 2017 got around 5 percent of shareholder support.
The proposals State Street voted for appeared to be safer ones that were generally more popular among shareholders. For example, it supported the disclosure of workforce gender and race data from Lam Research Corporation, which had 77 percent support. And it abstained twice on two other proposals that, again, had relatively strong support among shareholders.
All the proposals State Street voted against had less than 20 percent support from shareholders. If you look at it one way, the firm could just have been siding with general sentiment. On the other, if the whole idea is that it’s going to push companies on diversity, shouldn’t it be willing to go against the tide? If the premise here is that a more diverse leadership group breeds more success, why not support a proposal to measure a CEO’s performance, at least in part, on that?
Olivia Offner, a spokesperson for State Street, said in a statement that the firm has “engaged with hundreds of companies on the importance of diversity, voted against directors over 1,000 times for lack of board gender diversity, and been a vocal proponent of the value of diversity in writing and speech.” She said that examining its voting record on proposals “that have significant variations in language year over year” doesn’t tell the full story.
“We do not simply consider the topic being addressed in a shareholder proposal when deciding how to vote; rather, we vote on a case-by-case basis, taking into account each company’s unique circumstances and the level of disclosure relative to our expectations,” she said.
Morningstar notes that the company’s gender diversity fund voting record is in line with its overall approach; taking voting action is seen “as a last resort.”
The Fearless Girl is cool — and she also kind of sucks
When the Fearless Girl statue landed in downtown Manhattan to commemorate International Women’s Day 2017, it was exciting. And it was a powerful image: a small, proud girl standing up to a charging bull in the financial center of the world.
Tourists and passersby flocked to snap pictures with her (though less so now that she’s in front of the stock exchange and not the bull), and it’s hard not to feel that the concept is, frankly, pretty neat. But you dig a little deeper, and it starts to feel less great.
Soon after the Fearless Girl was unveiled, longtime financial writer Susan Antilla pointed out the hypocrisy in a note to the girl herself:
But let’s get real, girlfriend. State Street, a leader in the “Wall Street wants women to get ahead, really it does” arena, has three women on its 11-person board, two women on its 14-member management committee and 17 women among its 79 executive leaders. And in the financial world, that makes State Street a diversity overachiever.
The artist who created the bull in the late 1980s after the 1987 stock market crash, Arturo Di Modica, complained that the placement of the Fearless Girl in front of his statue turned his work into something it was not. The bull was supposed to a symbol of American pride and resilience, not aggression or threat. (He also argued that in placing the girl in front of the bull, she became derivative of his work and therefore was a copyright infringement.)
State Street has also had issues with the artist it commissioned to make the Fearless Girl statue, Kristen Visbal. It’s engaged in legal battles over what it says are unauthorized reproductions of the statue.
“While we are very proud to share Fearless Girl’s message with the world, given the time, energy and resources we have invested in the campaign we naturally must be very protective of how Fearless Girl is used by others, particularly for commercial purposes,” Offner said in a statement regarding its legal battle with Visbal. “As this is an ongoing legal matter, we cannot comment further.”
In other words: The Fearless Girl may be an inspiring symbol, but she’s also a business play.