Nasdaq neon Sign on brickwall

The push to bring more diversity to the boardroom has been taken up by Nasdaq — the stock-trading home of more than 3,300 public companies.  

Nasdaq proposed new listing rules Tuesday that would force companies on its U.S. exchange to disclose board-level diversity statistics. That disclosure is intended to push more female and LGBTQ directors up to the board level — a rarefied world still dominated by straight, white men despite the growing number of studies showing that diversity at the top leads to better business outcomes.  

The proposal was filed with the Securities and Exchange Commission and, if accepted, could mark a significant step forward in the fight toward diversity. 

Most listed companies would have to explain under the new rules why they do not have “at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+,” the stock exchange said. 

Nasdaq defined an underrepresented minority as someone who “self-identifies in one or more of the following groups: Black or African American; Hispanic or Latinx; Asian; Native American or Alaska Native; Native Hawaiian or Pacific Islander, or two or more races or ethnicities.”

Foreign companies and smaller firms could satisfy the new requirement with two female directors.

Companies that don’t meet the diversity thresholds will not be subject to delisting as long as they provide a public explanation.  

“Our goal with this proposal is to provide a transparent framework for  Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders; we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America,” said Adena Friedman, president and chief executive officer of Nasdaq. ​

The market is working with data company Equilar, which can help companies meet the objectives by offering access to a community of diverse candidates. 

“Nasdaq is heeding the call of the moment,” he said Anthony Romero, executive director of the American Civil Liberties Union. “Incremental change and window-dressing isn’t going to cut it anymore as consumers, stakeholders and the government increasingly hold corporate America’s feet to the fire.”

The Nasdaq is known as the market for many of the tech companies, such as Amazon, but also includes many other companies, including Columbia Sportswear Co. and Costco Wholesale Corp.

Many companies have work to do to diversify their board, but some, such as Amazon, meet the threshold already. The e-commerce giant’s board currently has 11 members, including five women and two people of color.

A spokesperson for Columbia noted: “We generally do not comment on proposed rules by Nasdaq. But we note that Columbia Sportswear Co. has had women on its board for decades. Until her passing in November 2019, Gert Boyle was chair of the board and her legacy continues to guide us in the current make-up of our board. We believe our current board would satisfy the proposed requirements as we understand them.”

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