Menendez reintroduces corporate diversity bill
Sen. Bob Menendez (D-N.J.) on Tuesday reintroduced legislation that would require public companies to disclose the racial, ethnic, gender and veteran composition of their corporate boards and senior management.
The bill, the Improving Corporate Governance Through Diversity Act, aims to address shortcomings in the U.S. Securities and Exchange Commission’s (SEC) diversity disclosure rule.
“For too long corporate America has fallen short in racial, ethnic and gender diversity. Without greater diversity in top corporate positions, the U.S. will fail to compete with other leading economies and stall our nation’s progress towards full inclusivity,” said Menendez, the highest-ranking Latino in Congress.
The House passed the legislation in 2019, which was introduced by Rep. Gregory Meeks (D-N.Y.), but it was not taken up in the Senate. It could face an uphill battle with the tight 50-50 partisan divide in the Senate.
The bill would also require the Treasury Department’s Director of the Office of Minority and Women Inclusion to publish a report to the SEC every three years, including best practices and compliance. It would establish a Diversity Advisory Group to study the status of corporate diversity and to submit annual reports to Congress.
Nine Democrats have co-sponsored the bill, including Senate Banking Committee Chairman Sherrod Brown (Ohio) and Sens. Elizabeth Warren (Mass.), Chris Van Hollen (Md.), Cory Booker (N.J.), Dianne Feinstein (Calif.) and Alex Padilla (Calif.).
The U.S. Chamber of Commerce has also endorsed the bill.
“Diversity has become increasingly important for good corporate governance and the Improving Corporate Governance Through Diversity Act will establish a model to organically boost diversity on boards through disclosure rather than the counterproductive quota-driven strategies that some have attempted,” said Tom Quaadman, executive vice president of the Chamber’s Center for Capital Markets Competitiveness.
Other groups — including the National Urban League, Nareit, Financial Services Forum, American Bankers Association, International Council of Shopping Centers, Bank Policy Institute and Real Estate Roundtable — also support the legislation.
These trade groups endorsed the bill last Congress, and in July sent a letter to then-Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Brown, arguing that the legislation would organically boost diversity on boards through disclosure.