Legislation introduced in the House March 7 seeks to increase gender diversity on corporate boards of directors, a goal in line with policy adopted by the ABA House of Delegates at its February Midyear Meeting.
H.R. 4718, sponsored by Rep. Carolyn B. Maloney (D-N.Y.), would require the Securities and Exchange Commission (SEC) to establish a Gender Diversity Advisory Group to study and issue a report with recommendations on strategies to increase gender diversity among the corporate directors of publicly traded companies. The advisory group would be comprised of representatives from the government, academia and the private sector.
The bill, which is supported by the U.S. Chamber of Commerce, also would require the SEC to issue annual reports on the status of gender diversity on corporate boards and to require public companies to report the gender composition of their board members and nominees.
Maloney introduced her legislation after receiving a report she requested from the Government Accountability Office (GAO) that found that, although women make up almost half of the nation’s workforce, they comprise only about 16 percent of seats in corporate boardrooms. The report also predicted that it could more than four decades for representation of women on boards to be on par with that of men and cited various factors that may hinder increases in women’s representation on boards: boards’ not prioritizing diversity in recruitment efforts; lower representation of women in the traditional pipeline for board positions; and low turnover of board seats. The report also found that SEC disclosures are considered inadequate by stakeholders.
“At this rate, our granddaughters and their daughters will face discrimination. We’ve got to get proactive, and encourage more companies to take the gender gap on their boards seriously. Every study shows that it’s not just good for half the population, it’s important for the bottom line. Profits go up when women are in the boardrooms,” Maloney said.
Earlier in the Congress, Rep. Don Beyer (D-Va.) introduced H. Res. 445, a resolution expressing the sense of the House that corporations should commit to utilizing the benefits of gender diversity of the boards of directors and other senior management positions.
The new ABA policy, brought to the association’s House of Delegates by the ABA Commission on Women in the Profession, urges public companies in the United States to diversify their boards to more closely reflect the diversity of society and the workforce in the United States.
The policy urges governments, investors and other market players to call on public companies to voluntarily adopt plans, policies and practices for achieving diverse boards and to publicly disclose such plans, policies and practices.