Women filled more than 600 board seats since California diversity mandate was enacted, report finds

Dive Brief:

Women filled 669 board seats in California between 2018 — when the state compelled public companies headquartered in the state to ensure gender diversity on boards — and June 30, according to California Partners Project's commissioned report released Oct. 13. Less than 3% of public company boards are composed of all male directors, compared to nearly 30% in 2018, the nonprofit found.
As of publication of the report, 650 public companies in California must abide by the law. Of the 5,225 board seats at these companies, women hold 1,275. Only 15 companies did not have women on their boards in 2020, according to the report. The law required each public company to have at least one woman on its board of directors by the end of 2019. The report found that 119 women serve on two California boards, and another 18 serve on three or more boards.
In compliance with the law, boards with six or more directors must have at least three female directors, boards of five must have at least two, and boards with four or fewer members must have one by Dec. 31, 2021. The data in the report reflects companies in the Russell 3000 Index, a market-capitalization-weighted U.S. equity index, and 192 other publicly traded companies headquartered in California.

Dive Insight:

In addition to increasing female representation on public company boards, Gov. Gavin Newsom signed a bill into law Sept. 30 that requires individuals from "underrepresented communities" to have at least one seat on certain corporate boards by the end of 2021.

Boards of publicly held corporations with headquarters in California must include "an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender," according to the law. At least one conservative watchdog group has filed lawsuits against California's secretary of state alleging the diversity mandates are unconstitutional. The group also alleged spending of taxpayer funds or taxpayer-financed resources to comply with the law's requirements is illegal.

Fortune 500 companies in the U.S. have been making progress in gender diversity, according to Heidrick & Struggles' U.S. Board Monitor report released Sept. 9. In 2019, almost half (44%) of non-executive director appointments were women, the report found. However, progress has been slower in regard to the racial diversity of Fortune 500 corporate boards. For example, appointments of Black board directors decreased to 10% of all appointments in 2019, compared to a high of 11% in 2017 and 2018, according to the report. And Hispanic board members represented 5% of appointees in 2019.

"We've found that companies with more diverse boards tend to outperform their peers, and there's a body of research that supports the value of diversity in boardrooms and the C-suite," Lyndon Taylor, managing partner, diversity and inclusion practice at Heidrick & Struggles, told HR Dive in a previous interview.

A need for more progress in gender diversity on boards remains, according to California Partners Project. "Even as we are heartened to see that the number of women on California boards has increased dramatically since 2018, we know great swaths of talent are still being overlooked," the report said.