Corporate Board Diversity

Corporate Board Diversity

Corporate Board Diversity is used to describe a broad range of demographic characteristics, abilities and attributes within the boardroom. This can refer to age, gender and educational background, professional skills and experience, philosophies, cultural identity, race, sexual orientation, and religion. This diversity will help create an array of perspectives and capabilities that serve the business needs and future of the company.

A successful business requires an effective board capable of delivering well. Therefore the composition of the board must be designed to achieve this objective. Diversity is a method for the board to accomplish this goal. It helps to develop different leadership mental, thinking, and emotional styles that help the understanding of risk.

Investors are therefore increasingly demanding that boards of directors be diverse. Certain large investment firms are actively voting against board members who don’t meet their standards for gender and racial equity. CalPERS, the pension fund for state workers has sent letters in August 2017 to 504 companies that are listed on Russell 3000, demanding that they develop and implement a strategy for diversity.

Furthermore, some states are implementing regulations that require companies to adopt measures to increase diversity on their boards. For example, the state of California requires that public companies with their headquarters in the state have a certain percentage of women and minority directors on their boards by 2021. Additionally, companies are also https://board.international/how-to-increase-corporate-board-diversity/ required to publish the racial and ethnic diversity of their boards.