Corporate Board Diversity is a term used to describe a wide range of demographic characteristics, abilities and attributes within the boardroom. This may include gender, age as well as educational background, professional experience and competencies such as philosophies, cultural identity such as sexual orientation, race, and religion. This diversity could help develop a useful range of perspectives and abilities to meet the business and future needs of the company.
A well-performing board is vital for a successful business and that is why the composition of a board should be designed to support this purpose. Diversity is one way that the board can accomplish this goal by fostering a variety of ways of thinking, leadership and emotional styles that promote a greater awareness of the risk.
Investors are now increasingly demanding that boards of directors be diverse. In fact, a number of large institutional investment management firms are beginning to actively vote against the board members of companies that fail to meet their standards for gender and racial diversity. CalPERS the state pension fund workers, sent letters in August 2017 to 504 companies that are listed on Russell 3000, demanding that they develop and implement a plan to promote diversity.
Certain states also adopt regulations that require companies to take steps to improve board diversity. For example, the state of California requires that public companies with headquarters in the state have a specific number of women and minority directors on their boards by 2021. Companies are also legally required to disclose the diversity of their board members, including ethnic and racial. of their board.