We are delighted to introduce our mini podcast series discussing the topic of board diversity and how it has changed in recent years, including a comparison of the regulation of board diversity between California and the UK. While it has come a long way, there is plenty more to be done.
In episode 1, Teresa L. Johnson, Partner at Arnold & Porter Kaye Scholer LLP in San Francisco, joins Partner Emma Bartlett to discuss the following:
- There is very little regulation in the UK with regard to board diversity – reliance has been placed on peer pressure, naming and shaming, and pressure from investors and stakeholders key to achieving change.
- In California, the requirement for minimum numbers of women on boards of California-based publicly traded companies came into force in 2018. That same year, 180 of the 650 public companies subject to the law had all-male boards. In 2020, just 2.3% of boards were all-male.
- While greater diversity on public boards has been achieved much quicker in California than in the UK, it is not without controversy.
- The UK has set voluntary targets for gender and ethnic minority public board directors, and to develop an increased pipeline of candidates for succession through mentoring and sponsorship.
- For the first time in the UK, there are no all-male boards in the FTSE 100 and there has been a year-on-year decline in the use of the ‘one and done’ mantra.
- Most positive, is the decision by investors and investor groups to take steps to embed progress using investor voting rights.
- Most California corporations have voluntarily complied, institutional investors have stepped up the pressure and a new NASDAQ proposal requiring minimum diversity on boards is currently pending.
- A progressive new law has been proposed in California, requiring a minimum number of directors from underrepresented communities (LGBTQ+ and racial minorities) on public boards. This gives rise to interesting issues of self-identification.
In our next episode, we will look at best practice examples showing how board diversity is actually being achieved.
For more information on the topics covered in this recording, please contact our Partner Emma Bartlett, who specialises in employment and partnership issues for multinational employers, senior executives, partnerships and partners.