With the state pension fund, Rhode Island will use its shareholder vote to promote diversity on corporate boards.
General Treasurer Seth Magaziner says the state will vote against boards with fewer than 30% women or racial minorities, for companies in which the state pension fund invests.
Magaziner said the new policy will promote diversity in corporate businesses, which will lead to better performance.
“It has a positive impact on profitability, a positive impact on stock performance and so diversity is worthwhile for its own sake, but it’s especially worthwhile when there’s a financial benefit to the state of Rhode Island,” said Magaziner.
The voting policy will go into effect later this spring. Magaziner said even with the state’s initiative, it will take time to see significant changes.
“We are starting from such a low place,” said Magaziner. “In the S and P 500, less than 20% of board seats are held by women, less than 15% of board seats are held by racial minorities. And so, corporate America has a long way to go in diversifying their leadership teams.”
Magaziner said some of the major fortune 500 companies the state will target are the Hess Corporation, Hershey Company, EMC Company and Phillips 66. Magaziner said he expects over half of the corporate businesses under review will get a veto from the state.