Corporate Board Diversity

Corporate Board Diversity is a term used to describe the broad variety of demographic characteristics, traits and abilities that can be found within the boardroom. This may include age, gender, educational background qualifications, professional experience and philosophies, as well as cultural identity such as sexual orientation, race and religion. This diversity can create an variety of perspectives and skills to meet the current and future needs of the business.

A successful company needs an effective board capable of performing effectively. Therefore, the composition of the board must be designed to help achieve this objective. Diversity is a way for the board to attain this goal. It helps to https://board.international/ develop different leadership thoughts, mental and emotional styles which support an understanding of risk.

Investors are progressively demanding that boards of directors be diverse. In fact, several large institutional investment management firms are now actively voting against board members of companies that do not meet their requirements for gender or racial diversity. CalPERS, the state pension fund workers, sent letters in August 2017 to 504 companies listed on Russell 3000, demanding that they create and implement a plan to promote diversity.

Furthermore, some states are passing laws that require companies to take measures to ensure board diversity. For example the state of California requires that public companies with their headquarters in the state have a certain percentage of female and underrepresented minority directors on their boards by 2021. Additionally, companies are required to report on the racial and ethnic diversity of their boards.