Following the killing of George Floyd, investors are increasingly calling for change and looking for company and board diversity data. A few weeks ago, I blogged about State Street’s request for companies to disclose board and workforce racial diversity data, and last week, Liz blogged on our “Proxy Season Blog” about Neuberger Berman’s willingness to use its proxy votes to push for diversity disclosure. With all this recent news, some may have missed that last year, Vanguard spoke up on board diversity by detailing expectations about board diversity as part of its 2019 Investment Stewardship Report.
In that report, Vanguard explained that in addition to promoting board gender diversity, the asset manager is asking boards to seek greater diversity. Here’s an excerpt and Vanguard’s list of expectations for public companies:
We have long believed in the importance of diversity in the boardroom, and we have increasingly advocated for greater representation of women on corporate boards. We are expanding our focus to more explicitly urge boards to seek greater diversity across a wide range of personal characteristics, such as gender, race, ethnicity, national origin, and age. Our board diversity expectations of public companies includes:
(1) Publish your perspectives on board diversity. Here’s what we ask companies: Does your board share its policies or perspectives on diversity? How do you approach board evolution? What steps do you take to get the widest range of perspectives and avoid groupthink? Vanguard and other investors want to know.
(2) Disclose your board diversity measures. We want companies to disclose the diversity makeup of their boards on dimensions such as gender, age, race, ethnicity, and national origin, at least on an aggregate basis.
(3) Broaden your search for director candidates. We encourage boards to look beyond traditional candidate pools—those with CEO-level experience— and purposely consider candidates who bring diverse perspectives into the boardroom.
(4) Make progress on this front. Vanguard expects companies to make significant progress on boardroom diversity across multiple dimensions and to prioritize adding diverse voices to their boards in the next few years.
-Lynn Jokela, TheCorporateCounsel.net September 15, 2020
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