Quotas in the Boardroom

Goldman Sachs now requires diversity quotas. “Starting on July 1st in the U.S. and Europe,” Goldman Sachs CEO David Solomon said, “we’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women.”

Bloomberg News said it’s the end of the “era of the white, all-male board.” Boston University management professor Fred Foulkes called it a “seismic change” and “what big investors are looking for these days,” because an all-male, all-white board is a “big negative.” (Of course, the diversity requirement will not apply to Asian companies. Goldman will take a Chinese or Korean company public with an all-male, all-Asian board.)

Goldman Sachs headquarters in New York. (Credit Image: © Richard B. Levine/Levine Roberts via ZUMA Press)

Financial giant State Street, which put up the “fearless girl” statue, demands companies it works with have at least one woman on the board. BlackRock wants at least two.

“Boards with a diverse mix of genders, ethnicities, career experiences, and ways of thinking have, as a result, a more diverse and aware mindset,” BlackRock CEO Larry Fink wrote in a 2018 letter to investors. “They are less likely to succumb to groupthink or miss new threats to a company’s business model. And they are better able to identify opportunities that promote long-term growth.”

Some politicians also want diversity quotas. In 2018, the California legislature overcame Chamber of Commerce opposition and passed the first state law requiring all public companies to have at least one female board member. “We have historical barriers not only to women but to folks who are African American and Latino, Asian American, and we need to address that as well,” California Assemblywoman Lorena Gonzalez told Roll Call last July. “We’re not done.”

Then-governor Jerry Brown signed the bill, although he worried it was unconstitutional. Attorney Creighton Meland filed a lawsuit arguing precisely that. However, over 90 percent of California-based businesses already comply with the law.

Legislators have proposed similar laws in Massachusetts, Washington, and New Jersey.

The U.S. House of Representatives passed the “Improving Corporate Governance Through Diversity Act” last November. It would require corporations to track and report the “diversity” of its board members.

“Corporate America should reflect the diversity of America, and the markets they seek to serve,” the bill’s sponsor, New York Rep. Gregory Meeks, said. “Not only is increasing diversity in the C-Suites and corporate boards the right thing to do, it is the smart business decision to make. Time and again we have seen studies reveal the value a diverse board adds to a company’s decision-making process through unique perspectives.” Mr. Meeks is black.

Senators Bob Menendez, Cory Booker, and Kamala Harris introduced the same bill in the Senate last year.

Laws requiring companies to report “diversity” won’t satisfy activists for long. Illinois almost passed a more aggressive version of California’s diversity mandate in 2019. H.B. 3394 originally required Illinois companies to have at least one woman, one black, and one Hispanic board member, but the legislature removed that requirement. Instead, the law now makes companies report management racial makeup and report on plans to increase diversity.

Jesse Jackson told the Chicago Tribune said the bill was “gutted” and “the struggle continues.” He wants more people of color “handling the 401K investments” and “the procurement pipelines,” calling for increased diversity “up and down the corporate system.”

Black Corporate Directors Conference co-founder John Rogers said the bill was merely the beginning. “The next step is to expose the private equity world, so many of which manage money for state pension plans,” he said. “It would be the next step to show the diversity of the boards of the companies that the private equity firms control.”

Corporate board affirmative action isn’t enough. Activists want diversity quotas at every level. Socialists tell us capitalism is “racist,” but powerful Wall Street firms are pushing these policies. South African-style diversity quotas are coming our way. Apparently white men can’t be trusted to run companies; we need women and non-white overseers.