BOARD DIVERSITY: PEOPLE OR PATHWAYS?

The movement for corporate board diversity is reaching an inflection point.Publicly traded corporations have increasingly embraced the push for gender diversity,¹ with the number of women on their boards climbing to over 20%, a 6.5% increase over the last four years.² A Nasdaq Diversity Rule, approved by the Securities and Exchange Commission (SEC) on Aug. 6, 2021, establishes a disclosure standard designed to “encourage board diversity and to provide stakeholders with ways to track board composition.”³ The report supporting the diversity proposal specifically referenced the business case for diversity, citing the literature showing that greater diversity is correlated with improved business performance, particularly “the quality of a company’s financial reporting,internal controls, public disclosures and management oversight.”⁴ And, following the European Union example, California has mandated greater board diversity as a matter of state law.⁵