In the USA, the Nasdaq asked the Securities and Exchange Commission if it can require all 3,300+ companies that trade on its exchange to (a) publicly disclose diversity statistics about their boards of directors, and (b) retain at least two diverse directors (one woman, one who identifies as an underrepresented minority and/or LGBTQ).
If the SEC gives the nod, boards will have two years to bring on at least one diverse director and two+ years to hire the second. If companies miss the deadline and fail to provide a sufficient explanation of why they missed it, they could get delisted.
As of now, 75% of Nasdaq-listed companies would not meet that benchmark. We know corporate America has made slow progress improving diversity at the top. In 2018, women held less than 1/4 of Fortune 500 board seats. From 2010–2018, seats held by Black directors increased just one percentage point to 9%.
This would mark the first time a major exchange would impose such requirements, but it's not alone in pushing for board diversity. California requires at least one diverse director for companies headquartered in the state, and Goldman Sachs does as well to underwrite an IPO.
For diversity as a success story, just turn to Europe: EU companies and others are successful in bringing more women into the top ranks of business. Norway was the first to introduce quotas for women in 2003. Iceland, Spain, and France followed with 40% targets. In 2015, Germany became the largest economy to impose a quota, mandating 30% of supervisory board seats be filled by women. Across Europe, the number of women on boards is climbing, although from a low base. The number of women board members at 734 large publicly traded companies across the Europe in 2016 was 23%, up from 11% in 2007, according to EU data. In countries with quotas in place, it’s higher: 44% in Iceland, 39% in Norway, 36% in France and 26% in Germany (2016 numbers).
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