McLean: You mentioned frustration. Can you explain that?

O’Hanley: There has been progress made in diversity overall as well as diversity on boards. I don’t mean to suggest no one is doing anything. A lot of companies are working very hard. But we are frustrated because a quarter of the Russell 3000, and these are the biggest companies in America, have no women board members. We don’t know what the right number is, but diversity of thought is a good thing, and our sense was that we needed to be a little sharper. We didn’t just want to say words. What we are saying is that we will be looking at this and it will be negative for you if we walk away feeling like you are not taking any steps.

McLean: What would you do if you do see a lack of action?

O’Hanley: What you can take away is that if a company did nothing, there is a possibility that we would vote against the slate of directors the company proposed.

McLean: That’s a pretty big step, and not one you see many traditional money managers taking. What would get you to that point?

O’Hanley: The overarching principle of stewardship means effective board leadership. Process is an important part of that. If our team walked away thinking that there was no concerted effort to have a diverse slate of board candidates, no effort to take that extra step, like hiring a search firm to look for candidates, that would be evidence to us of a lack of process.

McLean: There’s a broader question here about the role of so-called passive managers like State Street. How active should you be in shaping corporate governance?

O’Hanley: We talk about that all the time. Our institutional clients that are focused on this are the more sophisticated pension funds. They get that we can represent a large amount of the capital deployed in particular companies, and it is permanent capital. We can’t walk away. So they are with us. You add up every company in all of our indexes, and you get 9,000 companies. We can’t be active in all of them. But we focus on one large sector in a year where we do a deeper dive.

We have always had a stewardship approach, but if anything we have escalated it now, because we see what’s happening with the move from active to passive management. That puts more responsibility on passive managers to be paying attention to a lot of things.

McLean: When it comes to boardroom diversity, where do you want to be in a year?

O’Hanley: If you had asked me a week ago I would have had a different answer. There would have been a lower bar. But clearly, Fearless Girl has gotten a lot of attention and so she has already been very constructive.

In a year, we would like to see a significant change in the dialogue at companies with very low to no gender diversity. We would like to hear that there’s a real effect going on here. You might say that’s just talk. But companies take stewardship and governance conversations as seriously as those they have with any other kind of investment analyst. They don’t want to make promises they can’t keep because we will be back in a year. We always check in with any company that we have had any engagement with. They know we are not going away.