A study by AXA Investment Managers of Europe’s top 50 companies shows that those with a greater percentage of board members from emerging market economies source more of those revenues from those markets.
Matt Christensen, AXA’s Paris-based head of responsible investment is in Australia to launch a new environmental, social and governance (ESG) framework for use by Australian investors, and explained his methodology at a media briefing.
Board diversity and generating revenue
Christensen said that part of the framework was to look at the relationship between board diversity and revenues generated from outside home markets.
Looking at the nationality of board members at Europe’s top 50 corporations, the study showed that those with 20 per cent or more of board members from emerging markets were able to generate 60 per cent or more of their revenue from outside Europe.
“This is really a discussion to have around readiness to engage with emerging markets,” Christensen said. “These companies are geared around markets which are not traditional to them.
“Interestingly, some companies said they were aware of this and were even building in some key performance indicators, while others said this was the first time they had thought about it.”
Exceptions to the rule
In one case, a company with just over 20 per cent of its board members from emerging markets was generating 90 per cent of its revenues in those markets.
The highest ratio of emerging-market board members was just over 30 per cent in a company generating around 75 per cent of its revenue outside Europe.
AXA is rolling out its new framework along with its Responsible Investment Search Platform in the Australian market as it engages with Australian institutions on responsible investment issues.
