Do you own any FTSE350 shares? If so, sell them – now!

Do you own shares in any FTSE350 companies? If so, we recommend you sell them as soon as possible, and the objective of this piece is to explain why. The key reason is that the government is intent on bullying FTSE350 companies into having gender parity on their boards, regardless of the overwhelming evidence provided to the government on numerous occasions (including in the course of House of Commons and House of Lords inquiries) by Campaign for Merit in Business (“C4MB”) which shows conclusively that increasing the proportion of women on corporate boards leads to financial decline. It’s more an inexperience effect than a gender effect. The short C4MB briefing paper on the matter can be read here.

Shortly after David Cameron became Prime Minister in May 2010, leading a Conservative Party-led coalition, he appointed a Labour Party peer, Lord Davies of Abersoch, to report on how (not whether) to increase the proportion of women on major corporate boards. There was a great deal of talk at that time of the notion that companies could improve their financial performance by appointing more women onto their boards – the much-vaunted “business case” for doing so. The notion was, of course, always a fantasy. To sustain the fantasy, correlations (between female representation on boards, and enhanced financial performance) were misrepresented as causation, something which continues to this day.

The Davies Report was published in February 2011. It’s so ideologically-driven, we doubt the Fawcett Society would disagree with a sentence in it. The report is here:

140304 Davies Report, published February 2011

We recommend you look at page 3 of the report, the first page of the Executive Summary. There you’ll find this:

Evidence suggests that companies with a strong female representation at board and top management level perform better than those without (1) and that gender-diverse boards have a positive impact on performance.(2)

In the report, sources of material cited in references are identified at the base of the pages. Reference (1) takes you to a 2007 McKinsey report, “Women Matter,” which explicitly says that observed correlations between female representation on boards and enhanced financial performance aren’t evidence of causation and can’t be taken to even imply causation. Reference (2) is more interesting – because, as you’ll observe at the base of the page, no source of material is cited. We’ve put in numerous FOI requests to the DBIS, including one very recently, so we know that to this day they have no evidence for the causal link they’re clearly implying. In plain English, there’s no “business case” for increasing the proportion of women on boards.   

One of the key recommendations of the Davies Report (published in February 2011) was that if FTSE100 companies hadn’t “voluntarily” (we’ll return to this weasel word shortly) achieved 25% female representation on their boards by 2015, the government should consider introducing legislated gender quotas. One of the key contributors to the Davies Report was Professor Susan Vinnicombe, leader of the Cranfield International Centre for Women leaders, who admitted to a House of Lords inquiry that she had no evidence of a causal link between increasing the proportion of women on corporate boards, and enhanced financial performance. Two months ago we publicly challenged her with the following, and have yet to receive a response:

We challenge you to stop misleading people into believing correlations between increased female representation on boards and enhanced financial performance are, or may be, indicative of a beneficial gender effect, thereby justifying in some people’s minds (not ours) the government’s policy direction of pressuring companies to increase the number of women on their boards, through the threat of legislated gender quotas.

We challenge you to critique and discredit the five longitudinal studies which show that increasing female representation on corporate boards leads on average to corporate financial decline.

A link to our blog piece with the background to the challenge of Susan Vinnicombe: Our public challenges of Professor Susan Vinnicombe

We turn to Charlotte Sweeney, a woman described in the Foreword of a new Department of Business, Innovation and Skills (“DBIS”) report – to which we’ll be referring shortly – as follows:

…a senior HR executive with over 20 years’ experience in equality, diversity and corporate culture shift within the Banking sector.

Ms Sweeney has been riding the EDI (Equality, Diversity & Inclusivity) gravy train for 20 years. Wow. She’s covered some mileage, and six months ago she was the woman appointed by our odious socialist Anti-Business Secretary, Vince Cable MP, to report on how the “voluntary” (that weasel word again!) code for executive search firms is progressing. The purpose of the code – established in response to a Davies Report recommendation – is to put pressure on executive search firms to drive up the proportion of women on the “long lists” and “short lists” they present to major corporate clients considering the recruitment of new executive and non-executive directors.

After her appointment, we publicly challenged Ms Sweeney with the following:

Charlotte, good afternoon. We have five longitudinal studies showing that when more women are appointed to major corporate boards, financial performance declines:

If you refute these studies, could you please outline why? And if you know of any reports or studies showing a causal link between increased female representation on boards and improved financial performance, could you please email me at with directions to them? Please don’t send me reports (e.g. McKinsey, Credit Suisse, Reuters…) which make it perfectly clear they’re reporting correlation, not causation, and that correlation neither proves nor even implies causation. Thank you.

A link to our blog piece with the background to the challenge of Charlotte Sweeney, to which (of course) we never received a substantive response:

Our public challenge to Charlotte Sweeney

Ms Sweeney’s report for the DBIS was published this afternoon. It has the snappy title, “Women on Boards: Voluntary Code for Executive Search Firms – Taking the Next Step” and it’s downloadable through this link:

140304 Charlotte Sweeney’s Eomen on Boards report

The report’s content from beginning to end is mind-numbing and predictably packed with the Orwellian doublespeak employed by people engaged in social engineering exercises. To spare you the pain of reading the whole report, we’ve done so on your behalf. One thing we’re pleased to say is that C4MB has clearly impacted on the claims made in such reports. The only mention we could find of the fantasy that more women on boards leads to enhanced financial performance was this gem, at the start of the Introduction:

Gender parity on corporate boards continues to be a hugely debated issue both within the UK and the European Commission. The business case for gender parity on boards has been widely articulated and is clear.(3)

Reference (3) takes you to – honestly, we’re not making this up – The Davies Report!

What’s worth drawing from Ms Sweeney’s report? Well, it’s made clear the ‘more women on boards’ social engineering initiative will extend to the FTSE350 in time, and beyond 2015 – neither of which comes as the slightest surprise. But this is the first time the government’s objective of ‘parity’ on corporate boards – 50% women, 50% men – has been revealed in an official publication, to the best of our knowledge. Again, to be frank, we’re not surprised. It was long ago admitted to a parliamentary inquiry that the 25% goal for women on FTSE100 boards was ‘only a major milestone on a longer journey’.

Extracts from the report’s “Foreword,” signed by Vince Cable MP and Lord Davies:

We are entering the home straight. The actions taken by UK listed companies in 2014 will determine whether we succeed in achieving the target set by Lord Davies and his Steering Group to reach 25% of women on FTSE 100 boards by 2015. Women currently occupy 1 in 5 of all FTSE 100 board positions. The target is encouragingly close and equates to a net increase of around 50 more women on FTSE 100 boards. This is clearly achievable, so long as we take action now…

We would particularly like to thank the executive search firms that are already pushing hard on this agenda, who have played a crucial and significant role so far in improving the number of women on British boards. However, there is still more to do and we need to see consistent and concerted action from all 70 executive search firms signed up to the Code to ensure a successful outcome in 2015 and beyond.

The Executive Summary starts with:

The business case for increasing the number of women on corporate boards has been widely articulated and is clear. Since the launch of Lord Davies’s original report there has been a step change in the perception and commitment of gaining more diversity on FTSE 350 boards.

In January 2014 women accounted for 20.4% of corporate board members of FTSE 100 companies. This continued the positive trend and was up from 19% in 2013, 12.4% in 2010 and 9.4% in 2004. Although the pace of change has increased, and current trends suggest the target of 25% by 2015 set out by Lord Davies in his 2011 report will be achieved, we cannot be complacent and assume further progress will be made without further considered focus.

So there you have it. A Conservative-led coalition, with a male feminist Prime Minister and a socialist Business Secretary, is intent on destroying major British corporations on the altar of gender equality. Hopefully Cable and his socialist chums will have discovered a wealth-generating alternative to capitalism when the inevitable crash comes.

If we were investing our money, it wouldn’t be in the shares of FTSE350 companies. There’s only one way those shares can go in the medium to longer term, given the social engineering exercises assaulting these companies’ boardrooms, and that’s down. For those of you intent on holding FTSE350 shares, we can only hope the knowledge that half the directors of those failing companies will be women will bring you some cold comfort. Just don’t say we didn’t warn you in good time.

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