California Legislature Passes Bill to Require Diversity on Corporate Boards
California Legislature passed a bill today that requires diversity on corporate boards in California.
By News Desk
AB 979 is a joint legislation authored by Assemblymembers Chris Holden, Cristina Garcia, and David Chiu, with Eloise Gomez Reyes as principal co-author. The bill requires publicly held corporations headquartered in California to have at least one director from an underrepresented community by the close of 2021.
Assemblymember Chris Holden said:
Corporations have money, power, and influence. If we are going to address racial injustice and inequity in our society, it’s imperative that corporate boards reflect the diversity of our State. One great benefit of this action – corporations with ethnically diverse boards have shown to outperform those that lack diversity.
Soon after the social unrest following the killing of George Floyd, many corporations publicly stated their support for diversity and Black lives. Critics, however, have pointed out that this public support for social justice movements often does not lead to long-term structural change in hiring and retention policies of a diverse staff and leadership. The current statistics are quite stark. The Harvard Law School Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards found that out of 1,222 new board members of Fortune 100 companies, 77% were white.
In addition to the 2021 benchmark, AB 979 also requires corporate boards to include two members from underrepresented communities for corporations with more than four members, while corporations with more than nine must have a minimum of three by 2022. The bill defines a director from an underrepresented community as an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.
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