Nasdaq wants to require the more than 3,000 companies listed on its stock exchange to improve boardroom diversity by appointing at least one woman and at least one minority or LGBTQ+ person to their boards.
Companies would have to report regularly on how many women and minorities sit on their boards and then follow that up by appointing at least one member of each group, under a rule submitted Tuesday to the Securities and Exchange Commission.
“We believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America,” said Adena Friedman, president and CEO of NASDAQ, in the statement from the exchange.
Women and minorities are still badly underrepresented in the citadels of corporate power, and three-quarters of listed companies would not currently meet the new diversity standards, according to Nasdaq.
But that is slowly changing.
California Gov. Gavin Newsom recently signed a bill requiring companies headquartered in the state to have at least one minority on their boards, while Goldman Sachs has said it won’t take a company public unless at least one minority group member sits on its board.
Boardroom diversity requirements have been standard in some European countries for years. Norway introduced gender quotas in 2003, while Iceland, Spain and France require that women fill 40% of supervisory board seats.
Germany is the largest economy to impose quotas, requiring at least 30% of board seats to be filled by women.
“Corporate diversity, at all levels, opens up a clear path to innovation and growth. We are inspired by the support from our issuers and the financial community with this effort and look forward to working together with companies of all sizes to create stronger and more inclusive boards,” said Nelson Griggs, president of the Nasdaq exchange.