WASHINGTON, D.C. – On June 15, 2023, U.S. Rep. Gregory W. Meeks (NY-05), Senior Member of the House Financial Services Committee, and Sen. Bob Menendez (D-NJ), a Senior Member of the Senate Banking Committee, reintroduced the Improving Corporate Governance Through Diversity Act of 2023. The bicameral legislation originally introduced in 2017 would require public companies to annually disclose the gender, race, ethnicity and veteran status of their board directors, nominees, and senior executive officers.
“Diversity must be a core principle for businesses to achieve lasting success,” said Rep. Meeks. “Corporate C-suites and boardrooms should reflect the racial, ethnic, and gender diversity of our country. Shareholders and employees have a right to know whether corporations recognize diversity as a core value, especially considering the competitive advantage it affords the U.S. in the broader global economy. If diversity can’t be accurately reported, it can’t be improved. This legislation provides clear definitions and guidelines to advance equity and inclusion in corporate America.”
“For far too long, corporate America has failed to meet their goal of achieving greater racial, ethnic, and gender diversity at all levels, especially in its upper echelons of leadership. Without greater diversity in top corporate positions, the U.S. will be at a disadvantage in our efforts to outcompete other leading economies,” said Sen. Menendez. “This bill will ensure corporate America is more transparent about their diversity and inclusion efforts, while highlighting the need for further accountability for public companies. It’s time corporate boardrooms mirror the rich diversity of our nation.”
In addition to the disclosures related to diversity status, the bill would also provide information about a firm’s strategic plans to promote diversity amongst their board or executives. The legislation also mandates that the SEC establish a Diversity Advisory Group to carry out a study to promote diversity for issuers and report to congress on the progress.
The legislation is supported by the following organizations: American Bankers Association, Financial Services Forum, ICSC, Investment Company Institute (ICI), Latino Corporate Directors Association (LCDA), NAHREP, Nareit, National Urban League, SIFMA, U.S. Black Chambers, Inc., and U.S. Chamber of Commerce.
“Diversity is important to good corporate governance, and the Chamber is pleased to again support Senator Menendez’s and Mr. Meeks’ Improving Corporate Governance Through Diversity Act, which will encourage gender, racial, and ethnic diversity on corporate boards,” said Tom Quaadman, Executive Vice President, Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce. “We applaud the historically strong congressional support for this legislation and look forward to this bill being considered and signed into law.”
“Organizations function most efficiently and successfully when they reflect the rich diversity of the communities they serve,” said Marc H. Morial, President and CEO of the National Urban League. “Policies that promote diversity, equity, and inclusion among corporate leadership are significant drivers of business performance. By incentivizing companies to seek a mix of perspectives, experiences, and knowledge among their leadership teams, the Improving Corporate Governance Through Diversity Act will help build a more resilient, innovative, and profitable business community. We applaud Congressman Meeks and Senator Menendez for re-introducing this important piece of legislation.”
“Latinos are the least represented ethnic demographic in the board rooms and c-suites of America’s largest corporations, which is why NAHREP has specifically advocated for diversity and inclusion efforts in the financial sector,” said Gary Acosta, Co-Founder & CEO, NAHREP. “The data clearly shows that having diverse leaders at the most senior levels of the corporate ladder creates an environment where companies accomplish more, especially for underserved populations. Hiring, promoting and recognizing the contributions of Hispanic professionals is not only good for the individuals affected, it is in the best interests of the industry and the country. NAHREP recognizes Senator Menendez and Congressman Meeks for their leadership in introducing this bill and looks forward to its passage.”
Last Congress, the House passed the Improving Corporate Governance Through Diversity Act of 2022.
For a copy of the legislative text click HERE.
Original source can be found here.
