Women gain California board seats, but where are the women of color?

Dive Brief:

Women hold 26.5% of the seats on California's public boards, up from 15.5% in 2018, according to a recent analysis by the California Partners Project, a gender equity advocacy group.
Despite representative gains for women, the distribution has not been proportionate when subdivided along racial and ethnic lines. Although they make up 32% of the population, women of color hold 6.6% of California's public board seats. In particular, Latinas are highly underrepresented, according to CPP; while they make up 19% of the population, they hold only 1% of public board seats.
The near-doubling in female representation was spurred by the passage in September 2018 of Senate Bill 826, which requires public companies with four or fewer board directors to have at least one female member, those with five directors to have at least two, and those with six or more directors to have at least three. Qualifying boards must comply by the end of 2021. According to CPP, SB 826 is "the first law in the country" to compel public companies to add female directors to their boards.

Dive Insight:

California has been at the forefront of initiatives to legally mandate the diversification of public boards. In September 2020, Governor Newsom followed SB 826 by signing into law Assembly Bill 979, which requires public boards by the end of 2021 to include at least one member who self-identifies as a member from an underrepresented community, which it defines as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual, or transgender.

The move to diversify boards comes backed by multiple studies showing the benefits of diverse experiences and perspectives among board directors. The text of SB 826 cites a 2014 Credit Suisse study that found having at least one woman on the board increased return on equity; a 2012 University of California, Berkeley study that found companies with women on their boards are more likely to "create a sustainable future" by instituting strong governance structures and a high degree of transparency; and more Credit Suisse findings tying the presence of women on the board to debt avoidance, better stock performance, and high performance during the recession.

While California's public boards have made substantive progress in terms of gender parity — with more than 80% of public companies meeting or close to meeting the requirement — more than 560 women still need to be added by the end of the year to meet the terms of the law, CPP has pointed out.

In its recent analysis, CPP highlighted strategies for increasing the number of women of color in board seats, including expanding searches to include those who are not part of pre-existing "insular" networks; analyzing skill set needs and moving beyond CEOS, CFOs and public company directors; and more.

"The way the economy is headed and our world is headed, you really need different perspectives at the table," Olivia Morgan, co-founder and executive director of CPP, told HR Dive. "You don't want 12 CEOs. You want someone who has an HR background, someone who has a public affairs [background], someone who has a cybersecurity [background]. In a very complex global environment, you need to be able to draw on a variety of skill sets."

While companies are on track to meet the requirements of SB 826 and Morgan said the feedback has been positive, the push to diversify boards through legal means has not gone unchallenged. Conservative watchdog group Judicial Watch filed lawsuits in response to both SB 826 and AB 979, and the Pacific Legal Foundation, a libertarian group, also filed suit against SB 826. While the latter suit was dismissed, the two Judicial Watch suits remain pending.

Morgan told HR Dive she wasn't worried about legal action. "Our concern has been that the law had a chance to work," she said. "I really think it's an example of changing a mindset, and then embracing that change and it becoming the new norm … Even if it were to come under question or threat, I think that once people experience the benefits, they aren't going to move backwards."