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  • Date of publication: 31 August 2020
  • 1848
  • Investors Chasing Stable Returns Should Buy Firms Run by Women


    Return on capital is more stable, Nordea researchers find
    Diversity helps companies adapt to changing circumstances

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  • Return on capital is more stable, Nordea researchers find
  • Diversity helps companies adapt to changing circumstances


When it comes to gender diversity, it’s hard to compete with the Nordics.

The region is home to the world’s three most gender-equal nations: Iceland, Norway and Finland, according to the World Economic Forum. (Sweden places 5th out of 144 while the U.S. ranks 49th.) So Nordic findings in how gender equality affects areas such as corporate life and investing may offer a glimpse of things to come for other corners of the globe.

With that in mind, the region’s biggest bank, Nordea, says a key contribution that women make to the companies they run is stable returns.

Researchers at Nordea looked at the Nordic region’s 100 biggest listed companies, and analyzed returns on capital employed and share price performance over a 12-year period through 2016, based on gender. They discovered that doubling the number of women on boards and in top management led to more stable returns.

“Now that the pace of change has increased, the pressure on these management teams and on these boards is greater than before,” Johan Trocmé, director of research insights at Nordea, said in an interview. “Because the cost of not staying on top of things can be you no longer have a business in two years, five years, 10 years time.”

To be sure, the study didn’t point to any significant overall benefit to returns associated with having more women in top positions. But women’s ability to navigate volatile times better than men stood out.

The findings coincide with a sudden spike in volatility in the beginning of February that unnerved many investors. The study also comes as corporations are struggling to adapt to rapid shifts in their markets brought by technology, which represents another kind of volatility.

“Business models are being challenged by new consumer behavior, by new technological solutions,” Trocmé said. “Having a business which is robust in the face of that change is crucial.”

During the 12 years in the Nordea study, there was a doubling in the number of women on Nordic boards (to one in three) and in the number in group management (to one in five). Norway’s introduction of mandatory quotas helped drive the increase.

Returns were most stable at companies that employed women in top management roles. The Nordea analysts found they had a 40 percent lower median standard deviation in annual returns. They also found the Nordic companies with the most women outperformed European peers.

“Norway has led the way for the others to actually see this is actually do-able without the world going under,” Trocmé said. “If you have a board of directors which is 100 percent white males aged 45 to 65 with the same sort of upbringing and ethnicity, will they take in and weigh and consider all the inputs from society, from the economy, from the customer base, from the regulator, when they make decisions?”

Even in the Nordics, there’s more to be done to bring greater equality to the work place, particularly when just 20 percent of upper management are women, Trocmé said.

Even top-ranked Iceland is still pushing. It proposed requiring companies to more prominently publish gender-pay gaps in their financial statements. Introduced last year, the measure would help ensure that companies evaluate and remunerate jobs similarly.