In the U.S., the national dialogue has turned to race in 2020.
Following the death of George Floyd while in police custody,
companies have paid more attention to systemic racism and diversity
in their own ranks. Investors are also increasingly talking about
this topic as a human capital management issue.
While the Illinois law does not mandate companies be racially
diverse, it directs them to publicly disclose the racial, ethnic
and gender diversity of their boards of directors by the end of
this year. And then, starting in March 2021, the University of
Illinois will publish a report card evaluating how companies are
faring, which Welch said will be used to name and shame companies
that are not up to snuff.
"Everyone appreciates collecting data and making further
decisions based on that data," Welch said. "I think this is going
to become model legislation that you'll see in other states."
California has also taken action to promote corporate board
diversity. In the episode, we interview California Assemblyman
Chris Holden, who co-authored a law passed in September of this
year that expands the state's diversity requirements for the boards
of publicly traded companies to include people who identify as
being a part of a racial minority, an Indigenous community or the
LGBTQ community. Holden said that companies should have no trouble
finding qualified director candidates and noted that studies have
shown companies with diverse boards generally perform better.
The California law also includes a disclosure mandate.
Specifically, it requires the California Secretary of State to
track and publicly report compliance with the law as well as levy
fines for noncompliance.