EEO TRUST SUBMISSION ON PROPOSED AMENDMENTS TO THE
NZSX/NZDX LISTING RULES FOR NZX’S MAIN BOARD AND DEBT
MARKET
INTRODUCTION
The EEO Trust welcomes the opportunity to provide a submission on the
proposed amendments to the NZSX/NZDX Listing Rules for NZX’s Main Board
and Debt Market.
EEO Trust
The Equal Employment Opportunities (EEO) Trust is a not-for-profit organisation
tasked with providing EEO information and tools to employers and raising
awareness of diversity issues in New Zealand workplaces.
The EEO Trust assists employers in introducing and managing proven EEO
thinking and practices; encourages diversity by promoting the recruitment and
development of people on the basis of merit; and generates awareness of the
business benefits and rewards of an inclusive workplace.
Based in Auckland, the EEO Trust works with employers around New Zealand,
providing the latest resources, ideas and information to support workplaces to
achieve success through effectively managing diversity.
The EEO Trust is resourced by fees from member organisations and Government
contributions. It is governed by a Board of Trustees, chaired by Michael Barnett,
Chief Executive of the Auckland Regional Chamber of Commerce and Industry.
The EEO Trust’s commitments:

Promote equal employment opportunities through good management
practices and initiatives;

Provide relevant EEO information from businesses and thought-leaders
around the world to help New Zealand employers develop versatile
workplaces;

Acknowledge and recognise workplaces through EEO Trust publications
and in the annual EEO Trust Work & Life Awards, which celebrate business
success through effective management of a diverse workforce;

Develop EEO projects that promote EEO/diversity, such as practical
workshops and tools;

Commission research on EEO/diversity in New Zealand;

Develop and maintain a database of EEO resources. The on-line EEO
Library catalogue is accessible and easy to use.
The EEO Trust confirms that it wishes to be heard in support of this
submission. Please confirm arrangements with EEO Trust Chairman Michael
Barnett: mbarnett@chamber.co.nz or 0275 631 150.
Scope
The scope of the EEO Trust submission to the proposed amendments to the
NZSX/NZDX Listing Rules for NZX’s Main Board and Debt Market is limited to
Part II – Proposed Diversity Listing Rule.
Accordingly, the balance of our submission focuses on the:



Proposed addition to Rule 10.5.5 requiring disclosure as to gender
diversity
Merit in aligning with Australian ASX diversity policy
Opportunity for significant expansion of organisation-wide diversity
training.
Our recommendations are identified in each section of our submission.
PROPOSED DIVERSITY LISTING RULE
Rule 10.5.5 of the NZSX/NZDX Listing Rules requires an issuer to make certain
disclosures in its Annual Report. NZX is proposing to add a new paragraph to
Rule 10.5.5 requiring an issuer to include an additional disclosure in its Annual
Report as to gender diversity.
The proposed rule will require the annual report of an issuer to contain:


A table showing gender composition of the board, senior management
team and any subsidiary board; and
A Board statement evaluating the organisation’s performance with respect
to diversity policy (if applicable).
NZX is also proposing a footnote to Rule 10.5.5 indicating that an issuer may
also choose to disclose policy or practices in relation to diversity, both gender
diversity and other diversity dimensions, if it considers the disclosure of that
information “to be beneficial to security holders and stakeholders”.
Overall, the EEO Trust supports the proposed rule change requiring reporting on
gender composition of boards, senior management teams and subsidiary boards.
We support disclosure of as much relevant information as possible, including a
breakdown of the gender split of a workforce and at different levels within an
organization, as this offers an overview of female representation in its “talent
pipeline”.
We note the request that submissions take into account NZX’s “limited role as a
market operator”, rather than a legislative or government entity. As a “market
operator,” we agree that the rationale for NZX to include diversity reporting in
company disclosures is grounded in providing investors with as much
information as possible with which to assess the current and future value of a
company. Such information suggests how well an organization might be
engaging with all available talent.
We strongly submit that diversity is an economic driver of competitiveness for
companies. As noted in the NZX proposal introduction, there is research
worldwide that emphasises the potential benefits of capturing diversity, including
diversity of thought and better risk management, at the governance level.
In particular, research has shown that increased gender diversity on boards is
associated with better financial performance,[1] and that improved workforce
participation by women at all levels positively impacts on the economy.
Improved gender diversity broadens the pool for recruitment of high-quality
employees, enhances employee retention, encourages greater innovation, and
improves corporate image and reputation.
A forum conducted by the EEO Trust in 2009 and attended by 60 invited
business leaders recommended reporting on gender as an important step in
making progress to increase diversity at board level (see EEO Trust website
http://www.eeotrust.org.nz/a place at the table/index.cfm).
Overall, we strongly agree that full disclosure of company diversity profiles will
facilitate greater transparency and accountability in relation to the policy NZX
proposed to put in place, together with enabling a clearer understanding of the
objectives to be achieved by the company.
Accordingly, we support and recommend that the NZX diversity policy proposal
be strengthened to require a disclosure on an ‘if not, why not’ basis – as applies
in the Australian ASX diversity policy[2] and also the United Kingdom – rather
than simply giving an issuer the option to provide an evaluation of performance
with respect to its diversity policy “if applicable”.
There are some further reasons for aligning the NZX proposals with Australia.
ALIGNMENT WITH AUSTRALIA’S ASX DIVERSITY POLICY
With 2013 marking 30 years of the Closer Economic Relations Trade Agreement,
the New Zealand and Australian Productivity Commissions have been asked to
undertake a joint study reporting to the Australian and New Zealand
Governments by December 2012.
[1]
Research by the Australian Reiby Institute shows a correlation between numbers of women on boards and
higher returns. Over three and five -year periods, ASX500 companies with women directors delivered
significantly higher return on equity than companies without any women directors. October 2011.
[2]
See ASX Corporate Governance Council, ‘Corporate Governance Principle and Recommendations with 2010
Amendments’, Principle 3, pages 24-24.
See ASX Corporate Governance Principles and Recommendations with 2010 Amendments, Principle 3, pages
24-25.
The Commission’s joint report will include potential areas of further economic
reform and integration, with a focus on critical issues for business. With the
ASX’s recently strengthened and more explicit diversity policy in mind, we
suggest and recommend that the NZX proposal seek to include some ASXaligned comparative indicators covering such matters as reporting of overall
business strategy, what measurable objectives are included, and which
programmes of an issuer support diversity policy.
There is also merit in aligning with Australian ASX policy from ease of
compliance point of view.
New Zealand entities reporting to the ASX must already provide more than is
suggested under the NZX diversity proposal, so would not require additional
resources to fulfill local obligations.
New Zealand companies engaging with the EEO Trust have told us that ASX
reporting requirements have given their diversity initiatives and focus in this
country a powerful push.
In summary, many companies see New Zealand and Australia as a single labour
market. A more transparent alignment of respective diversity listing rules will
contribute to the overall New Zealand-Australia objective of achieving further
economic reform and integration.
OPPORTUNITY FOR STRENGTHENED ORGANISATION-WIDE DIVERSITY
TRAINING
The EEO Trust notes and agrees with NZX that over time, the proposed diversity
reporting requirement may lead to broader participation in markets, enable
issuers to better engage and fully utilize the available talent pool, and so build
and maintain a competitive edge in local and global markets.
There is an opportunity for NZX to act as ‘market leader’ as well as operator, for
example, by having its own diversity policy and measures on the NZX website.
The ASX, for example, has a comprehensive set of resources listed on its
website aimed at helping companies to implement the diversity-based
recommendations introduced in 2010. The resource includes consultants and
training organisations that undertake diversity-related activities.
A similar listing on the NZX website of New Zealand organisations undertaking
diversity-related activities would demonstrate commitment to these principles.
The EEO Trust is ideally positioned to provide this support and already has a
section on its website dedicated to debate and articles on diversity in
governance, as well as sample EEO and diversity policies for reference. The
material provides a platform on which strengthened training could be designed
to assist companies wanting to establish more diverse boards.
We believe there is a wider need for diversity training for board members and
senior management, as well as in the SME, NFP and iwi sectors.
We value diversity in its widest sense at the board table. We suggest and
recommend that an effective way to ensure a NZX gender policy succeeds is
the availability of training to assist companies with implementation.
A parallel focus on diversity training for all organisations would help broaden the
NZX initiative by fostering a governance culture that embraces diversity across
the wider business community.
The EEO Trust is in a position to offer companies practical support to ensure that
implementation of NZX gender policy is well-informed, coherent and, ultimately,
valuable.
IN CONCLUSION
Our suggestions and recommendations on the proposed Diversity Listing Rule
are put forward in the positive spirit of continuous improvement of New
Zealand’s business environment.
We look forward to discussing them directly with you, and in particular how we
might help NZX and its listed companies realize the true value of diversity in
governance.
Michael Barnett
Chairman, EEO Trust
Mobile: 0275 631 150