Morningstar announced the launch of the Morningstar® Developed Markets ex-Japan Gender Diversity Index℠, designed to provide exposure to developed market companies exhibiting strong gender diversity policy and practices.
In a press release, the firm pointed out that investor demand for ESG has increased drastically in the last decade, driving the need for these types of indexes. In this case, it will be powered by the data and scoring methodology of Equileap, a global provider of data and insights on gender equality for investors. More specifically, the constituents of the new index are weighted according to 19 gender equality criteria, including gender balance across the workforce, the gender pay gap, paid parental leave, and anti-sexual harassment policies.
The Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund with approximately 1.5 trillion dollars in assets under management as of June 2020, has adopted the index as its benchmark to invest.
“During a tumultuous year consumed by a global health and economic crisis in which research shows working women pay a disproportional toll, transparent practices and policies that advance gender representation should be top of mind for companies. We are thrilled to be working with Equileap and GPIF on a meaningful endeavor that we believe will have the potential to not only act as a catalyst to shape corporate behavior but also help investors achieve their financial goals”, said Ron Bundy, president of Morningstar Indexes.
This launch is in line with the white paper published by Morningstar and Equileap “Investing Inclusively: Building Shareholder Value Through Gender Diversity.” The report highlights that companies that foster gender diversity and create inclusive cultures are tapping into the potential of the full population and are positioned to benefit from the effects of cognitive diversity. In this sense, “they are not only advancing the cause of human rights but also have the potential to maximize shareholder value”.
The index is derived from the Morningstar Developed Markets ex-Japan Large-Mid Index, which includes large and mid-capitalization equities from the U.S., Canada, Western Europe, Israel, Australia, Hong Kong, New Zealand, and Singapore. “In addition to providing a similar risk/return profile to the broad market, it is built to provide exposure to publicly traded companies with strong gender diversity policies embedded in their corporate culture and that ensure equal opportunities to employees, irrespective of their gender”, Morningstar concluded.
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