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Corporate Board Diversity

Corporate Board Diversity is a term used to describe a broad spectrum of demographic characteristics as well as attributes and abilities within the boardroom. This may include age, gender, educational background, professional experience and competencies such as philosophies, cultural identity and sexual orientation, race and religion. This diversity can provide an array of perspectives and capabilities that can serve the business needs and future needs of the company.

A well-performing board is essential for a successful business and that is why the composition of a board has to be designed to support this objective. Diversity is a method for the board to reach this goal. It promotes different leadership thoughts, mental and emotional approaches that contribute to a greater understanding of risk.

Investors are progressively demanding that board members be diverse. Some large institutional investment companies are actively deciding against board members who www.board.international/how-to-transition-to-paperless-board-meetings/ don’t meet their standards for gender and racial equality. 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 come up with and implement a strategy for diversity.

Certain states also pass regulations that force companies to adopt measures to increase board diversity. California for instance requires that public companies with their headquarters in the state have at least a certain percentage of female directors and directors from minorities that are underrepresented on their boards by the year 2021. Companies are also required by law to report the ethnic and racial diversity of their board.

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