Mark Gilbert is a Bloomberg Gadfly columnist covering asset management. He previously was a Bloomberg View columnist, and prior to that the London bureau chief for Bloomberg News. He is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”

Europe's male, pale and stale boardrooms face the same fate as the most polluting companies -- evolve or die.

In recent years, the fund management industry has started to take its environmental, social and governance responsibilities more seriously, mostly by shunning investments deemed damaging to the planet. But there's another thread to ESG that's poised to reshape investment behavior and reduce the gender imbalance in company management -- diversity.

From next year, the European Commission will require large, listed companies in the European Union to include diversity information in their annual reports, with regard to "age, gender, or educational and professional backgrounds" of their management. On gender in particular, the glass ceiling is still very much in evidence.

By naming and shaming the least diverse companies, regulators will focus attention on diversity as another consideration for investors screening companies to meet their ESG obligations. Luke Templeman, an analyst at Deutsche Bank AG in London, reckons the impact will be similar to how the 2015 climate conference in Paris ignited the shift to more environmentally friendlier allocations.

In 2013, just 60 billion euros ($71 billion) of European funds focused on sustainable investments after growing by 11 percent annually in the previous two years, Templeman said in a research report published earlier this week. By the end of 2015, that had more than doubled to 145 billion euros. "The inevitable tide of public opinion and regulation" could drive a move to taking diversity issues into account "with unexpected speed," he said.

While diversity is a topic of conversation among investors, it doesn't currently carry much influence over asset allocation, according to a survey of 100 asset managers controlling more than $8 trillion published last month by New Financial, a London-based think tank focused on capital markets.

A Little Less Conversation, a Little More Action
Percentage of asset owners in survey that:
Source: New Financial

Moreover, fund managers will have to get their own houses in order. Only a fifth of the companies New Financial analysed either set diversity targets or provided a gender breakdown for their trustees -- something which contrasts badly with the more than 40 percent that claim to be addressing diversity imbalances internally.

In September, the European Securities and Markets Authority and the European Banking Authority published guidelines for the companies they regulate:

The diversity policy for significant institutions should include a quantitative target for the representation of the underrepresented gender in the management body. Significant institutions should quantify the targeted participation of the underrepresented gender and specify an appropriate timeframe within which the target should be met and how it will be met.

Implementing ESG policies will be a key challenge for the asset management industry in the coming years. The more data that's available, the more robust those policies can become. The management guru Tom Peters once said the soundest management advice he ever heard was "What gets measured gets done." The more extensive the disclosure, the greater the pressure on companies will become to hire more women in the executive suite.

--Gadfly's Elaine He contributed graphics.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Mark Gilbert in London at

To contact the editor responsible for this story:
Edward Evans at