The pressure for change is now coming from all sides. The Biden administration’s renewed emphasis on diversity, expressed in several executive orders, emphasizes equity and inclusion which will filter in meeting rooms. The swearing-in of Vice President Kamala Harris, the first woman and the first person of color to hold the second highest office in the country, was also a milestone. Mr. Biden’s choice for Securities and Exchange Commission chairman Gary Gensler is expected to push companies to disclose their diversity data.
Last year, California passed a law mandating a minimum level of gender diversity on boards. Starting this year, State Street will vote against some candidates for the board of directors of companies that do not disclose diversity data, and BlackRock may do the same. The Nasdaq is seeking regulatory approval to require various boards of directors and related disclosures in publicly traded companies, on pain of expulsion. (When asset managers and exchanges talk about diversity, it follows that banks take note.)
“The old guard has moved,” said Rebecca Thornton, who heads JPMorgan’s executive advisory service. “Many stood in an ivory tower with a prejudice that ‘this board is only made up of CEOs and we are not going to negotiate on quality to achieve diversity.’ Those who are mature enough to ignore the title and join in on the reunion see value in having that diverse voice in the room.
But boards are also careful to manage the recruiting process well, for fear of giving ammunition to critics of quotas and other mandates. This week, Arthur Levitt Jr., the former chairman of the SEC under the Clinton administration, called the Nasdaq’s proposals “politics at heart“questioned the link between board diversity and financial performance, and said new rules would not break hiring habits that” depend on informal social networks where friends recommend each other. “
This is where groups like Ms. Burns’ Board Diversity Action Alliance, the Executive Board of Directors, Latin American Association of Corporate Directors and Women directors of companies come into play, expanding networks beyond the usual suspects.
“It is not too difficult to find diverse and qualified directors. In a country of over 330 million people, there are a lot of qualified candidates, ”wrote John Rogers and Mellody Hobson of Ariel Investments. in a letter to the SEC support the Nasdaq diversity proposal. Ms Burns also explained the error of the so-called pipeline issue during the DealBook online summit in November: