Story at a glance
- Nasdaq submitted a rule to the SEC that would require companies to disclose their diversity stats.
- This follows the Black Lives Matter protests decrying systemic racism.
Nasdaq is preparing to enact a new requirement that would force companies listed on its index to disclose and include more diversity figures on their executive boards, focusing on the amount of people of color, women and people of diverse sexualities and gender identities.
The Wall Street Journal reports that Nasdaq submitted a proposal with the Securities and Exchange Commission (SEC) that requires listed companies to have at least one woman on their boards, as well as a director who is a minority or one who is lesbian, gay, bisexual or transgender.
Underrepresented minorities, namely employees who identify as Black, Hispanic, Latino, Asian, Native American or other races are also required to be present on the boards of listed companies.
Similar initiatives have been launched in the wake of the Black Lives Matter movement, which put a spotlight on institutional racism and discrimination in the U.S. Nasdaq conducted a review of its listed companies and found that roughly 25 percent of companies met diversity requirements.
Nasdaq blames this on how companies report the demographics on their teams.
Smaller companies, as well as foreign companies, were more likely to have less diversity on their boards.
If Nasdaq's proposal is approved, companies must disclose their diversity metrics within a year. More selective tiers will require that companies hire at least two diverse directors within four years of the rule being approved, and others would need to meet the requirements in five years.
Listed companies would self-report their diversity statistics.
A similar push to force companies to employ more diverse individuals in positions of leadership is surging across the country. In October, California passed a law requiring publicly held companies in the state to increase the diversity on their boards of directors.
On the corporate level, heavyweight companies like Microsoft and Uber will demand that law firms have a significant number of Black attorneys working on high-profile cases.