Corporate Board Diversity

Corporate Board Diversity is used to describe a broad variety of demographic characteristics as well as attributes and abilities within the boardroom. This can include gender, age, education background, professional experience and experience, philosophies, cultural identity, race, sexual orientation, as well as religion. This diversity can create an range of perspectives and abilities to meet the current and future needs of the business.

A well-performing board is crucial for a successful business This is the reason why the composition of a board must be designed to achieve this goal. Diversity is a way for the board to reach this objective. It promotes different leadership thoughts, mental and emotional approaches that contribute to an understanding of the risks.

As such investors are now insisting that their companies have a diverse board. In fact, several large institutional investment management firms are beginning to actively vote against board members of companies that fail to meet their standards for gender and racial diversity. For example in August of 2017, CalPERS, a pension fund for state employees, sent letters to 504 of the companies that are listed on the Russell 3000 index and demanded the creation of an action plan and policy to achieve diversity.

Some states also enact rules that require companies take steps to improve board diversity. California for instance requires that public corporations headquartered in the state have at least a certain number female directors and directors of minority groups who are underrepresented on their boards by 2021. Companies are also required by law to reveal the diversity of their board members, including ethnic and racial. of their board.

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