Why Aren’t There More Women on Corporate Boards?
Why doesn’t your company have more women on its board? That’s the question that BlackRock, one of the world’s largest asset managers, asked companies that had fewer than two women on their boards.
BlackRock nudged companies that make up the Russell 1000 Index (the 1000 largest US companies) to explain their strategy, saying that a diverse board helps companies attract and retain employees.
“Irrespective of a company’s industry, location or size, we believe that a lack of diversity on the board undermines its ability to make effective strategic decisions,” it wrote to companies.
Some of the responses they got back were surprising, said Michelle Edkins, BlackRock’s global head of stewardship, Bloomberg reported.
“On board diversity, frankly some of the answers we got were from the 1880s,” Bloomberg reported Edkins saying. She said these were among the most frustrating responses: “There aren’t any qualified women,” “We don’t need a woman director” and “We’re not a consumer-facing company.”
There are 367 companies in the Russell 1000 with fewer than two women on their boards, according to data compiled by Bloomberg. BlackRock added a stipulation that it expects companies to have at least two women directors on their boards to its proxy voting guidelines.
We say kudos to BlackRock for pushing the needle.
California is doing its part too, as it will be the first state to require publicly traded companies to have at least one woman on their board of directors. The law was signed by Gov. Jerry Brown in October, and it requires public companies whose principal executive offices are located in California to comply by the end of 2019. By the end of 2021, the minimum will be two female directors if the company has five directors on its board, or three women if it has seven directors. Currently, a quarter of the 445 publicly traded companies based in California don’t have a single woman on their boards, according to National Public Radio.