Missed Opportunities: The Gender Gap in Sovereign Funds Leadership

Sovereign funds, the perennial underperformers in gender equality, faced a disappointing 2024. With an aggregate score of just 28, they remain the lowest-ranked institutions in the OMFIF Gender Balance Index. While Europe emerged as a beacon of progress, other regions slid backward. This article unpacks the data and highlights solutions for a more inclusive future.

Source : OMFIF GBI 2023-24

Sovereign wealth funds (SWFs) are state-owned investment vehicles tasked with managing and growing national wealth. They typically derive their funds from surplus revenues—such as those from oil, gas, or other natural resources—or from foreign exchange reserves. These funds play a significant role in global finance, controlling over $10 trillion in assets and influencing markets worldwide.

The 2024 OMFIF Gender Balance Index (GBI) highlights their shortcomings in gender diversity, with sovereign funds achieving an aggregate score of just 28. For context, GBI scores are scaled from 0 to 100, where 100 represents perfect gender parity across leadership roles. A score of 28 indicates severe underrepresentation of women in top positions.

Not only are sovereign funds performing poorly overall, but progress has also stalled and even reversed. Compared to 2023, a net 9% of funds experienced a decline in gender balance scores, reversing the previous year's 21% net improvement. This regression underscores a pressing need for these influential institutions to prioritize gender equality and implement effective strategies to address the imbalance.

Europe: A Rare Bright Spot

Amidst this global decline, Europe emerged as an exception. It became the highest-performing region in the GBI for the first time, with its average score rising from 50 to 67 (OMFIF,2024). This progress is largely attributed to changes at the executive and board levels. Norges Bank Investment Management (NBIM), for instance, led the index with an impressive score of 91. NBIM’s gender parity is a standout achievement. Women now make up half of its executive committee, holding key positions like Chief Technology and Operating Officer (Birgitte Byrne) and Chief Investment Officer of Real Assets (Mie Caroline Holstad). Additionally, six out of eleven board members are women, showcasing institution-wide representation. This success not only boosted Europe’s overall performance but also set a benchmark for other regions.

Global Backsliding: A Stark Contrast

While Europe advanced, other regions faltered. North America, historically a leader in gender balance, stagnated this year. Latin America, which showed significant progress in 2023, saw its average score drop slightly to 40. The Asia-Pacific region remained entrenched at a dismal 17, while sub-Saharan Africa and the Middle East continued to underperform with regional averages of 5 and 13, respectively (IMF, 2024). The declines in these regions highlight systemic challenges. Notably, five funds scored zero this year, indicating no women in leadership positions. Among them, Angola’s sovereign fund saw its score plummet by 35 points after replacing its only two female executives with men. Similarly, Egypt’s sovereign fund dropped 27 points for similar reasons (OMFIF,2024). These stark regressions underscore missed opportunities to advance gender diversity.

Leadership Pipeline: Signs of Progress Amidst Stagnation

The leadership pipeline for women in sovereign funds remains mixed. While only five funds are led by women—a figure unchanged for three years—women hold about a third of non-CEO C-suite roles. Specifically, 35% of CFOs, 33% of COOs, and 32% of CIOs are women (OMFIF,2024).

This representation, however, is overshadowed by broader stagnation. Restructuring efforts in funds like Australia’s Future Fund and Alberta Investment Management Corporation failed to prioritize gender diversity. Both funds experienced double-digit declines in their GBI scores due to male-dominated appointments. These cases reveal a troubling pattern: structural changes often perpetuate, rather than disrupt, gender imbalances (Curry,2024).

Technology: A Glimmer of Hope

One area of promise is technology leadership within sovereign funds. Of the seven chief technology officer (CTO) roles included in the index, four are held by women—a notable 57% representation (OMFIF,2024). Two of these positions are in sub-Saharan Africa: Makano Mosidi (South Africa’s Public Investment Corporation) and Sheila Malebogo Sealetsa (Botswana’s Pula Fund). This trend suggests that technology, often less bound by traditional hierarchies, could become a key avenue for advancing female leadership, particularly in emerging markets.

Lessons from Leaders: Policies That Work

The Victorian Funds Management Corporation (VFMC), ranked second in the index with a score of 89, demonstrates how intentional policies can drive change. VFMC’s approach includes paid parental leave, flexible working arrangements, and return-to-work coaching. These initiatives create an inclusive environment that supports women’s career advancement. Despite a slight drop in its score this year due to overrepresentation of women in leadership, VFMC remains a model for fostering balance and inclusion.

Building Momentum: A Path Forward

While there are glimmers of progress, the overall trend remains bleak. Sovereign funds must move beyond incremental changes and adopt systemic strategies to close the gender gap. Targeted recruitment, mentorship programs, and diversity mandates for executive roles can help address persistent imbalances. Sharing best practices, as seen with NBIM and VFMC, could also accelerate progress across regions (Óladóttir,2024).

The underrepresentation of women in sovereign funds is not just an ethical issue—it is a strategic one. Diverse leadership teams are better equipped to navigate complex challenges and deliver superior outcomes. As the financial stewards of trillions in assets, sovereign funds have a responsibility to reflect the diversity of the societies they serve (Curry,2024).

The 2024 GBI reveals a sobering reality: sovereign funds remain the worst performers in gender diversity, with global backsliding threatening even modest gains. While Europe’s progress offers a roadmap for change, other regions must overcome systemic inertia to achieve meaningful improvements. Closing the gender gap requires bold, deliberate action—anything less risks perpetuating the status quo. Sovereign funds cannot afford to ignore the value of diverse leadership. The future of these institutions, and the societies they influence, depends on it.

References

OMFIF Gender Balance Index 2024, Chapter 5: Sovereign Funds

International Monetary Fund. Global Financial Stability Report 2024

Curry, Regina. "Increasing Female Representation in Finance." Franklin Templeton, 2024.

Óladóttir, Á. D., Christiansen, T. H., Gunnarsdóttir, S., & Kristjánsdóttir, E. S. (2024). Closing the gap: TMT quotas, investment strategies, and succession policies for gender equality. In Encyclopedia of Diversity, Equity, Inclusion and Spirituality (pp. 1-16). Cham: Springer Nature Switzerland