Editor’s note: This column is part of InvestorPlace.com’s Ultimate Guide to ESG Investing.
To give you an idea of how vital women CEOs are to environmental, social and governance (ESG) investment strategies, former Bank of England and Bank of Canada governor Mark Carney was appointed in late August as Brookfield Asset Management’s (NYSE:BAM) head of ESG investing.
What does this have to do with women as CEOs and the companies that employ them? Plenty.
More than one study has proven that companies who hire women as CEOs do better for their shareholders. As S&P Global’s Daniel Sandberg wrote:
“Firms with female CEOs and CFOs have produced superior stock price performance, compared to the market average. In the 24 months post-appointment, female CEOs saw a 20% increase in stock price momentum and female CFOs saw a 6% increase in profitability and 8% larger stock returns. These results are economically and statistically significant.”
Brookfield hired Carney to represent the alternative asset manager as it moves to capture a more significant chunk of this burgeoning market. If it didn’t feel women were a big part of ESG investing, it likely wouldn’t have made such a high-profile hire.
ESG investing is a big deal, and Mark Carney knows it. The man could have had almost any job he wanted after leaving the Bank of England. He took this one.
Who are the women CEOs leading the charge? Here are 10 companies I believe are at the top of the list.
- Citigroup (NYSE:C)
- General Motors (NYSE:GM)
- Coty (NYSE:COTY)
- United Parcel Service (NYSE:UPS)
- Advanced Micro Devices (NASDAQ:AMD)
- Hershey (NYSE:HSY)
- Nasdaq (NASDAQ:NDAQ)
- Franklin Resources (NYSE:BEN)
- Clorox (NYSE:CLX)
- Best Buy (NYSE:BBY)
ESG Investing Leaders: Jane Fraser, Citigroup (C)
Could Jane Fraser be the Ruth Bader Ginsburg of U.S. banking? I believe she could.
On Sept. 10, Citigroup named Jane Fraser to be its next CEO. She will replace current CEO Michael Corbat when he retires in February. Fraser, who heads the bank’s consumer unit, will be the first woman to hold the top job at a major U.S. bank.
Corbat, who has worked at the bank for 37 years and the last eight as CEO, clearly believed she had the right stuff for the job, or he wouldn’t have promoted her to bank president in 2019.
“I have worked with Jane for many years and am proud to have her succeed me,” Corbat said. “With her leadership, experience and values, I know she will make an outstanding CEO.”
Catalyst, the non-profit group that works to make workplaces friendlier for women, believes Fraser’s promotion shatters the glass ceiling in the banking industry.
“It demonstrates that it is not that women aren’t there or available and ready,” Tanya van Biesen, Catalyst’s senior vice president of global corporate engagement, said. “It’s just taken us time to realize that leadership can come in a woman’s body.”
Indeed it can. It’s just one more reason why owning Citigroup stock in the future is a smart move.
Mary Barra, General Motors (GM)
When Mary Barra became CEO of General Motors in December 2013, the 33-year veteran engineer broke an equally important barrier for women, becoming the first female head of a U.S. automaker.
Barra’s hiring was a huge deal. Why? Women make up such a small part of the auto industry.
“Women represent a minority presence in the auto industry, comprising 21% of the total workforce. According to federal data, 39,000 of the industry’s 185,200 employees were women. And women hold about 3.3 million of 12 million jobs in the broader manufacturing sector, or about 27%,” reported CNN Business at the time.
Another reason why her appointment matters is that women make the majority of vehicle purchasing decisions. Having a woman like Barra in charge of the automaker leverages that reality.
It has not been easy for Barra in the last seven years. GM stock has lost approximately 16% of its value through Sept. 22.
And while Barra believes electric vehicles are the future for General Motors, her engineering hat also tells her that it’s not going to happen overnight. Perhaps not until 2040 will we see our roads filled with electric cars.
I doubt she’ll still be CEO in 2040. However, another woman could follow in her footsteps.
ESG Investing Leaders: Sue Nabi, Coty (COTY)
In Coty’s fiscal fourth quarter, the cosmetics company lost almost $800 million. Fortunately for long-suffering shareholders, Executive Chairman Peter Harf has a plan up his sleeve to turn the business around.
Coty started by announcing the hiring of industry veteran Sue Nabi as its CEO. Nabi, who has more than 20 years of beauty experience at some of the top names, took over in September.
“Coty will become a product-centric organization, entirely focused on our customers and our brands. Our best-in-class teams will operate in a safe environment, where everyone will be empowered and encouraged to express themselves and bring new ideas and concepts to the table,” Nabi stated in a message to employees.
Between Coty’s 51% interest in Kylie Cosmetics and a 20% stake in Kim Kardashian’s KKW Beauty, Nabi will have lots of tools to work with as she attempts to return Coty to the top of the beauty world.
Down 75% year to date, Coty’s got nowhere to go but up. With a woman of Nabi’s talent in charge, shareholders can expect the culture shift at the company to make a big difference.
Carol Tomé, United Parcel Service (UPS)
UPS announced in March that Carol Tomé would become the 12th CEO in its history. Tomé, who retired from Home Depot (NYSE:HD) in August 2019 after 24 years with the home improvement retailer, was not exactly a stranger to the delivery business. She’d been a director of UPS since 2003 and was the chairperson of its audit committee.
In 2018, Tomé was one of the highest-paid female executives in Georgia, where both Home Depot and UPS are based. Only two other women earned more compensation.
You’ll read a lot about glass-ceiling breaking in my article about women CEOs. Tomé is no exception.
“I am the first outsider CEO (at UPS), the first woman CEO and the first woman CEO in the industry,” Tomé wrote in a March 12 text to the Saporta Report. She added that she will be one of only three women running a Fortune 50 company. “So, lots of glass was broken today.”
Her leadership skills will be on display as she continues to position UPS for further growth.
ESG Investing Leaders: Lisa Su, Advanced Micro Devices (AMD)
If there is a CEO that’s made a greater difference to their company than Lisa Su, I’d like to know who it is. Since Su became CEO in October 2014, owners of AMD stock have seen their shares appreciate more than 2,000%.
Right on the chip maker’s website is a quote that encapsulates Su’s determination to build a better business.
“AMD is at our best when we are taking bold, calculated risks and aggressively pursuing the leading-edge technologies that change the world.”
As InvestorPlace’s David Moadel said in November 2019, Lisa Su might be the best reason for confidence in AMD stock. Earlier last year, rumors circulated that Su was being pursued by International Business Machines (NYSE:IBM) as a possible replacement for then-CEO Ginni Rometty. At the time, I argued that it would be a big loss for Advanced Micro Devices, but a massive boost to IBM’s stock price.
“[T]he thought of Su taking the reins at IBM should have Big Blue’s shareholders praying the rumor’s not a dud,” I wrote on Aug. 22, 2019. “I’ve been fairly negative about IBM in recent times so a move to hire someone of Su’s caliber to replace Ginni Rometty as CEO would absolutely be the tonic it needs to reignite its growth on both the top and bottom line.”
It never happened. In the year since, IBM has a total return of 10.7%, compared to 70% for AMD.
Who says women CEOs can’t deliver the goods for shareholders? Not AMD.
Michele Buck, Hershey (HSY)
Michele Buck took the reins of the iconic chocolate company in March 2017 after 12 years of climbing the ranks. Buck was chosen from a list of candidates, both external and internal. Before Hershey, she spent 17 years at Kraft Heinz (NASDAQ:KHC).
The executive has been quick to make changes at Hershey to ensure it continues to innovate and grow.
“She comes in on day one announcing changes that she thought were necessary in the business and then in very short order after, refocusing on the core [and then] knocking off a handful of acquisitions, some of which were sizable,” Erin Lash, director of consumer equity research at Morningstar, told Food Dive.
Interestingly, Buck doesn’t feel being a woman slowed her progress to CEO.
“Buck downplays the fact that she is the lone female CEO at a major food or beverage company, as well as the first woman to lead Hershey — choosing instead to focus attention on her past successes and the results she has delivered running the confectioner,” Food Dive reported.
“Buck said she hasn’t been ‘disadvantaged’ during her career because she is a woman, but in a business community where females are not heavily represented in upper management, it remains an occasional topic of discussion with other executives.”
Hershey is lucky to have Buck as its leader.
ESG Investing Leaders: Adena Friedman, Nasdaq (NDAQ)
In November 2016 Adena Friedman became CEO of Nasdaq. At age 47, Friedman became the first woman to run a major U.S. stock exchange.
“Naming Adena CEO represents the successful conclusion of a rigorous, multiyear succession planning process,” said Nasdaq Chairman Borje Ekholm. “Adena is uniquely qualified for this role. For nearly two decades she has steadily risen through the leadership ranks, beginning as a Nasdaq intern.”
Long before Jane Fraser was promoted to the top job at Citigroup, Friedman was a big believer in female leadership in corporate America.
“You see so many fewer women in the recruitment pool, so therefore it makes it harder to reach parity,” Friedman said in a CNN Business article from May 2018. “That’s why we’ve got to get more women to go into finance, to get more women to go into tech, and to take advantage of the education available to them because that will then get them into the industry.”
As you can imagine, Friedman was thrilled by Fraser’s promotion.
“Jane is an outstanding executive who is respected throughout the financial industry, and she is a superb choice to be the next CEO of Citi,” Friedman wrote in an email to Bloomberg. “Her appointment as CEO also represents another significant milestone for women in the financial industry and across corporate America, and it sends an important message to all professional women — there are no limits to our capabilities and our potential.”
Friedman continues to transform Nasdaq into a technology company that happens to offer financial services. In the 45 months she has been CEO, NDAQ stock is up 575%.
That’s not too shabby.
Jennifer Johnson, Franklin Resources (BEN)
In November 2019 Jennifer Johnson became the new CEO of Franklin Resources, the parent company of investment manager Franklin Templeton. She took over from her brother, Greg Johnson, who became executive chairman.
Before you think this is an example of nepotism — the Johnson family controls more than 40% of BEN stock — Johnson has been working at the family business since she was 14. Most recently, she was president and chief operating officer, roles she held since 2016.
As for specific accomplishments over her 30-year tenure at the company, Johnson’s development of its ETF business is probably her finest hour. Shortly after taking the top job, Franklin announced it would buy Legg Mason for $4.5 billion in cash, adding more than $800 billion in assets under management.
As Jennifer Johnson stated shortly after her appointment, big responsibility comes with running a multi-generational family business.
“When your family name is tied to a company, you take that responsibility for that legacy, it’s part of your DNA. You’re really thinking in terms of what’s right in the long-term. [If] you make short-term decisions that are bad for your client, you’re going to be tarnished forever. It’s not like you can leave and get a job somewhere else and leave it behind you. It is part of who you are,” Johnson stated.
BEN stock has seriously underperformed in recent years, with an annualized total loss of 1.1% over the past decade. It’s time a woman took control of the company. Perhaps the results will be a marked improvement from her brother.
ESG Investing Leaders: Linda Rendle, Clorox (CLX)
Linda Rendle is the newest addition to the list of 32 S&P 500 companies with a woman CEO. Rendle nabbed the top job in early August, although she did not officially start until mid-September.
Former CEO Benno Dorer, who stepped aside after slightly less than six years as chief executive, remains with the company as executive chairman. Fourteen years his junior, Rendle has run several of the company’s various operations in her 17-year career with Clorox.
“Linda will be an excellent CEO, building on her track record of outstanding business results, her strong oversight of the development of the company’s IGNITE strategy and her values-led leadership,” said Pamela Thomas-Graham, lead independent director of the board.
Talk about taking the helm at a perfect time. On the same day as Rendle’s appointment, Clorox announced its fourth-quarter results. Thanks to the novel coronavirus, they were magnificent.
On the top line, sales increased by 22% in the quarter, while earnings per share rose by 28%. Sales across all four of its operating segments experienced double-digit increases during the quarter.
Investors have grown accustomed to a healthy appreciation of its stock in recent years. In the past three years, CLX stock has had an annualized total return of 18.7%, 730 basis points higher than the U.S. markets as a whole.
Shareholders needn’t worry. She’s the right woman for the job.
Corie Barry, Best Buy (BBY)
They say life 10% of life is what happens to you and the remaining 90% is how you react to it. If that’s true, Corie Barry ought to have a glorious career as CEO of the electronics retailer.
In June 2019, Barry became CEO after Hubert Joly stepped down to become executive chairman. Barry, who has been with Best Buy since 1999, is the company’s first female CEO.
Six months into her tenure as CEO, the company received an anonymous letter alleging she had an affair with former Vice President Karl Sanft. Both executives denied the allegation. An external law firm found that nothing inappropriate happened between the two executives. Best Buy endorsed her ongoing leadership.
It would be easy after such a difficult start to lose your focus. However, Barry has done nothing of the sort. Instead, the CEO has carried on building a better mousetrap.
In August, Best Buy announced that it would hire 1,000 technology employees over the next two years, with 30% of the hires either women or people of color. Based in Minneapolis, where George Floyd lost his life at the hands of police, it was a meaningful gesture to the community.
Barry had big shoes to fill when she took the top job in 2019, but its second-quarter results, which included a 242% increase in digital sales, shows that she’s more than up to the task.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.