Companies want to be ahead of the curve on this
Boards of publicly owned companies are required to disclose female and minority board membership, as well as how they identify and appoint those members
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Companies have long been talking about how their boards need to be more diverse. But now the legal landscape is changing, with some states mandating that companies do more than talk.
In Illinois, for instance, boards of publicly owned companies are required to disclose female and minority board membership, as well as how they identify and appoint those members. California has gone even further, mandating that boards have at least one woman, as well as a certain number of directors from underrepresented racial, ethnic, or LGBT communities. Other states, including Washington, Colorado, and Pennsylvania, have also passed legislation to encourage diverse boards, and more are considering this step.
All of this means that, in addition to being an ethical and reputational imperative, boosting board diversity is quickly becoming a legal one as well. So what should companies keep in mind?
“Because there’s such a patchwork of inconsistent state statutes—and because many of these statutes are looking at different kinds of diversity—it’s very hard, from a compliance standpoint, to figure out a one-size-fits-all answer,” says Mark McCareins, codirector of Kellogg’s JDMBA program and a clinical professor of business law.
[This article has been republished, with permission, from Kellogg Insight, the faculty research & ideas magazine of Kellogg School of Management at Northwestern University]