The Nasdaq’s proposal to mandate diversity requirements for Nasdaq-listed companies has been… *(drumroll)* approved. 🥁 ✅
The proposal will require listed companies to appoint at least one woman and at least one racial or LGBTQ+ minority to a director role. The Nasdaq will also require publicly-listed companies to report diversity statistics.
Board diversity requirements for businesses are controversial, but prevalent in other countries. For example: Norway, Spain, France, and Iceland mandate all company boards to include 40% women. However, research on director diversity is mixed. Some reports show board diversity improves company performance; others show no significant relationship between market performance and diversity.
Right now, over 75% of Nasdaq-listed companies don’t meet the minimum proposed requirements. SEC Chairman Gary Gensler shared:
“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders.”
Some groups have criticized the proposal, claiming it could hinder financial performance. Some have suggested that it violates civil rights laws. Regardless, some large companies like Goldman Sachs and Microsoft have voiced their support. 🤷
This will likely be a topic of drama for a while on Wall Street and Capitol Hill. Here’s the WSJ with more.