Document summary
Diversity is now a key proxy for assessing the ability of companies to develop or sustain their leadership, skills and expertise in areas outside their domestic markets, from a business culture point of view. This is particularly important where significant future revenue growth is dependent upon revenue from emerging markets. Kepler Cheuvreux's research universe of the 50 largest European companies by market cap has significant exposure to emerging markets, but there is a clear discrepancy with the number of emerging-market directors on their boards or in their senior management teams. Good diversity ensures that the experience and expertise on the board should reflect the revenue and risk exposure of the business, leading to less volatility and improved corporate performance. Kepler Cheuvreux identifies ABB, Anglo American, British American Tobacco, Rio Tinto, Royal Dutch Shell, SABMiller, UBS and Unilever as companies that are believed to positively link geographic revenue exposure with diversity at board and management level.