These 15 major US companies are showing that gender diversity is key to outperforming the competition
- Gender diversity has become an important priority for investors and executives.
- That's because firms that are more gender diverse have been shown to outperform their less-diverse counterparts.
- Morgan Stanley recently published a report on this topic, which introduced a new metric to evaluate gender diversity for more socially conscious investments and employment decisions.
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Firms that prioritize equal representation actually outperform firms that are less diverse.
That's according to Morgan Stanley's research on gender diversity, which identifies the difference in performance, through average returns, as 2.8% annually - which translates to a sizable sum if you're a firm as large as Walmart or Apple.
Morgan Stanley's new study is a follow-up to a report it released three years ago to help investors identify leaders in gender diversity. With this recent iteration, the company's researchers have introduced a new concept: the Holistic Equal Representation (HER) score.
The score takes four factors into account that have historically been reliable indicators of gender diversity: the percentage of women who are (1) board members, (2) executives, (3) managers, and (4) employees.
Even after controlling for size, yield, profitability, and risk, the researchers found that in the past nine years, firms with higher HER Scores outperformed those with lower scores.
"The stocks of gender-diverse companies tend to be larger, have higher yield and skew toward a lower beta," they wrote.
The Morgan Stanley report is geared toward investors, but employees who prioritize gender diversity (and startup founders or executives who seek to foster it), can benefit from understanding which companies in North America lead the way with top HER Scores.
Here are the top 15 US-based companies on the report, along with their Global Industry Classification Standard (GICS) sector: