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Providing Greater Transparency into Gender Diversity Policy and Practice

As goal #5 of The United Nations Sustainable Development Goals states, “Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world.“

In the corporate sphere, the same principles hold. Research has shown that companies committed to robust gender diversity policy and practice achieve superior financial results. The Morningstar® Developed Markets Ex-Japan Gender Diversity Index^SM offers exposure to companies exhibiting strong gender diversity policy and practice, leveraging The Equileap Gender Equality Scorecard™.

Learn more about the Gender Diversity Index creation

Measuring Gender Diversity

Morningstar uses the four categories of The Equileap Gender Equality Scorecard™ as screening criteria to award companies an overall score based on their commitment to equality in the workplace. All companies are given a gender equality criteria based on the 19 criteria grouped in four categories of the Equileap Gender Equality Scorecard™. The Scorecard was inspired by the United Nations's Women Empowerment Principles. Companies are weighted on the index based on their Equileap gender equality score. The four categories are outlined below:

Gender Balance in Leadership & Workforce


Criteria
Board of Directors
Executives
Senior Management
Workforce
Promotion & Career Development

Equal Compensation & Work-Life Balance


Criteria
Living Wage
Gender Pay Gap
Parental Leave
Flexible Work Options

Policies promoting Gender Equality


Criteria
Training & Career Development
Recruitment Strategy
Freedom from Violence, Abuse & Sexual Harassment
Safety at Work
Human Rights
Social Supply Chain
Supplier Diversity
Employee Protection

Commitment, Transparency & Accountability


Criteria
Commitment to Women’s Empowerment
Gender Audit

Equileap is the leading provider of data and insights on gender equality in the corporate sector. Launched in 2016 in Amsterdam, the social enterprise aims to accelerate progress toward gender equality in the workplace. Equileap researches several thousand public companies globally using its comprehensive Gender Equality Scorecard™ with 19 criteria, including gender balance across the workforce, the gender pay gap, paid parental leave, and anti-sexual -harassment policies. Its data is used by dozens of financial institutions globally.

Index Construction

Investable Universe

Select securities from the Morningstar Developed Markets Ex-Japan Large-Mid Index.

Security Selection

Securities that are part of the Alarm Bell controversy list, as assigned by Equileap, are ineligible for the index.

Morningstar Developed Markets ex Japan Gender Diversity Index

Morningstar Developed Markets ex Japan Gender Diversity Index

Tilt the security weights based on the assigned Equileap Gender Equality score.
Region neutral weights with respect to the benchmark.
Security weights capped at 5%.

Morningstar Tilt Factors

Within each broader region, securities are divided into five equally sized groups based on their Equileap Gender Equality Score. Within each region, the top group (Group 1) receives 1.5 times its market capitalization-driven weight, while the bottom group (Group 5) receives 0.50x weight.

Top Group

Bottom Group

Group: 1
Tilt 1.5x

Group: 2
Tilt 1.25x

Group: 3
Tilt 1.0x

Group: 4
Tilt 0.75x

Group: 5
Tilt 0.5x

Data

Environmental, social, and governance factors represent real risk that affects financial performance. The index aims to provide a similar risk/return profile to the broad market while emphasizing companies committed to gender equality.

Sector Breakdown

While sector weights do not diverge significantly from those of the parent index, companies within certain sectors tend to be more committed to gender equality than others.


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Country Breakdown

The gender diversity index maintains identical regional weights to that of its parent index. That said, weights to countries within those regions can diverge based on varying Gender Equality scores.