OpEd column: Women on boards — it’s the fiduciary thing to do!
As a board member for the California Public Employees Retirement System (CalPERS) and also the California State Teachers’ Retirement System (CalSTRS), I can tell you that recruiting women to serve on corporate boards is not only just, it is the fiduciary thing to do.
CalPERS and CalSTRS have long been part of efforts to improve diversity on corporate boards, including the founding of their own data base and being part of investor coalitions like the Thirty Percent Coalition, whose mission is to promote gender diversity, including women of color, on corporate boards.
Research has shown that there is a compelling correlation between board diversity and company performance and shareholder value. Sound corporate governance practices that include gender diversity as a priority is also rapidly becoming a prerequisite for institutional investors who represent today 80% of the equity market cap.
Also, ensuring that women have a voice in the discussions and decisions that will affect corporate actions increases workplace safety, which leads to effective risk management for workers and companies alike. There’s no denying that sexual harassment has been a real problem at male-dominated corporations like (Harvey) Weinstein Co., (Steve) Wynn Resorts, and CBRE Global Investors. It has also been an issue in real estate, where women janitors are subject to disproportionate amounts of harassment.
Because there is plenty of evidence that diversity improves performance and profitability, I have created a registry for those who are interested in serving as a corporate director. These are powerful oversight positions that influence the policies, strategy, and direction of our nation’s largest, most important companies.
In April, I will be partnering with state and national women’s organizations to hold a workshop to help women in my registry prepare for a position as a corporate director. Please contact me if you are interested in joining my registry. Send your resume to: firstname.lastname@example.org.
Traditionally, men have dominated corporate boardrooms … but, things are getting better. Whereas women held just 15 percent of corporate board seats in 2016, the number increased to 20 percent in 2019, according to a study last year by the Wall Street Journal. That means that every one out of five seats were held by women at America’s largest publicly traded companies.
That’s a move in the right direction.
In 2018, California took groundbreaking action on the issue when then-Gov. Jerry Brown signed Senate Bill 826, also known as “Women on Boards,” authored by Sens. Hannah-Beth Jackson and Toni Atkins. The law went into effect on Jan. 1, 2019, and established California as the first state in the nation to require all publicly held domestic or foreign corporations whose principal executive offices are located in California have at least one female director on their board by Dec. 31, 2019, either by filling an open seat or by adding a seat.
Depending upon the size of the public company’s board, up to two more women directors is required by Dec. 31, 2021 under Senate Bill 826.
Despite fears that the California law may not survive a challenge in court, New York is pursuing a similar path. New York Assemblymember Rebecca Seawright and Sen. Liz Krueger successfully sponsored legislation last year to enact a “Women on Corporate Boards Study.” According to their legislation, nearly 53 percent of the residents of New York State are women “but the percentage of women is much less in corporate board rooms.” Their bill passed both houses of the legislature and requires New York’s Department of State, in collaboration with their Department on Taxation and Finance, conduct a study to determine the number of women serving on each board of directors of domestic and foreign corporations authorized to do business in New York State.
“Women’s lack of representation in the boardroom is a persistent problem that has far-reaching implications for employees and consumers. Among other things, data shows that companies with less than three women on their board perform worse financially. This bill takes an important step toward getting the information we need to bring this problem into the light,” Sen. Krueger said.
In California, corporations are required by Senate Bill 826 to report the number of women serving on publicly held boards. California Secretary of State Alex Padilla issued a report on March 1, 2020, stating that 282 out of 625 publicly held corporations whose principal executive offices are located in California reported that they were in compliance with the “Women on Boards” law.
The bottom line: including more women on the boards of publicly held corporations is an important step in diversity and inclusion, as well as for the advancement of women. It advances equitable gender representation on corporate boards.
Diversity brings a more complete decision-making process in the boardroom. That’s never a bad thing and, really, it is a win-win for everyone.
Fiona Ma is treasurer of California. Email her via https://www.treasurer.ca.gov/comments.asp
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