Introduction

This report examines the impact of campaigns led by “The Big Three” institutional investors—State Street, BlackRock, and Vanguard—to increase gender diversity on corporate boards. Launched in 2017, these initiatives aimed to push companies to appoint more female directors by applying shareholder pressure. The report quantifies the effect of these campaigns and assesses their effectiveness in broadening female representation without government-imposed quotas.

The growing importance Of gender diversity

The report highlights the ongoing focus on diversity, equity, and inclusion (DEI), noting that while women represent 47% of the US workforce, only 5% hold CEO positions and 18% are top executives. Women made up just 13% of corporate board members in 2016, prompting significant investor intervention.

The big three’s campaigns for gender diversity

State Street launched its “Fearless Girl” campaign in 2017, followed by BlackRock and Vanguard. Collectively managing over $15 trillion, these institutional investors began voting against the re-election of directors at companies with insufficient gender diversity. By 2019, female representation on US corporate boards rose from 13.1% to 19.7%. Firms with higher Big Three ownership were 76% more likely to add female directors.

Empirical analysis of campaigns’ impact on board diversity

The Big Three’s influence resulted in fewer female board member departures and a greater likelihood of firms appointing their first female director. The campaigns accounted for one-third to two-thirds of the overall increase in female directorships between 2016 and 2019. Directors receiving negative votes from the Big Three experienced a 12.4% drop in future board appointments, demonstrating the effectiveness of shareholder pressure.

How companies increased gender diversity

Companies expanded their candidate searches beyond traditional executive networks, bringing in women less connected to the CEO and board members. Firms shifted their focus from prioritising CEO experience, which disproportionately favoured men. Spillover effects occurred as proxy advisory firms like ISS began recommending votes against directors at firms without female board members.

Tokenism or meaningful change?

The campaigns led to significant changes beyond tokenism. Women were promoted to key positions such as committee chairs, including audit and nominating committees. A one standard deviation increase in Big Three ownership led to a 5.9% rise in female chair appointments. Additionally, female directors added during the campaign were more independent, with fewer ties to management, further indicating meaningful governance changes.

Heterogeneity across campaigns

The timing of effectiveness varied. State Street saw immediate results in 2017, while BlackRock and Vanguard’s impacts grew from 2018 onwards. State Street targeted firms with no female directors, while BlackRock focused on companies with fewer than two female board members.

Factors limiting female representation

Before 2017, board diversity was limited by reliance on existing networks and a preference for CEO experience, rather than a lack of qualified women. The Big Three’s campaigns expanded candidate searches and reduced the focus on executive qualifications, addressing these issues. Investor-led changes were more effective than California’s 2019 gender quota law, which risked tokenism.

Conclusion

The Big Three campaigns significantly increased female representation on corporate boards, demonstrating the power of shareholder activism. By encouraging broader candidate searches and moving beyond traditional criteria, the campaigns achieved meaningful, lasting governance changes, with spillover effects influencing broader market practices.