No More Old Boys’ Club: Institutional Investors’ Fiduciary Duty to Advance Board Gender Diversity

Anat Alon-Beck - Case Western Reserve University School of Law
Darren Rosenblum - McGill University Faculty of Law
Michal Agmon-Gonnen - District Court of Tel Aviv and Tel Aviv University - Buchmann Faculty of Law
Vol. 55
November 2021
Page 445

As the benefits of gender equality for governance become more apparent, boardroom diversity initiatives abound. At the same time, institutional investors play an increasingly central role in the corporate world. This Article takes a novel approach to achieve this necessary change. Institutional investors already oversee firm leadership quite closely. This Article suggests that institutional investors hold a fiduciary duty to ensure there is gender diversity in leadership. As objections to state mandates persist, institutional investors can bring the benefits of private ordering to play a central role in ensuring equality.

Institutional investors play a dominant role over firms as principal shareholders. With that power comes responsibility. As stewards to their beneficiaries and the companies in which they invest, institutional investors could have a fiduciary duty to observe and encourage equality for women in the boardroom. Such investors, by virtue of their influence, can foster a marked improvement in gender equality. This Article analyzes the role fiduciary duties play for institutional investors and how diversification should figure as central among them.
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