Bill would require public companies to report gender of board members
A bill intended to increase the representation of women on corporate boards has won the backing of the U.S. Chamber of Commerce.
U.S. Rep. Carolyn Maloney, D-N.Y, introduced the Gender Diversity in Corporate Leadership Act on March 7. The Chamber told Maloney in a letter that it supports the bill, according to the Hill and a press release.
The bill would require public corporations to report the gender composition of their boards and board nominees to the U.S. Securities and Exchange Commission. It would also create an SEC advisory group to study and recommend ways to increase gender diversity on corporate boards.
A January report by the Government Accountability Office found that, in 2014, women held only 16 percent of corporate board seats among companies in the S&P 1500, up from 8 percent in 1997. “Even if we doubled the rate at which women are hired to corporate boards,” Maloney said in a press release, “we still wouldn’t reach equality until 2056.”
The ABA House of Delegates approved a resolution in February that urges public companies to diversify their corporate boards and to include board composition in public disclosure materials. The ABA Commission on Women in the Profession had sponsored the resolution along with several co-sponsors.
A report accompanying the resolution says diversity refers to individuals with a wide range of characteristics and experiences, including gender, race, ethnicity, age, sexual orientation, gender identity, and disability.
The report says the ABA has been instrumental in providing a pipeline of women to serve on company boards. In 2007, the DirectWomen Initiative of the ABA’s Business Law Section identified women lawyers who could provide the experience, independence, business judgment and diversity required for good corporate governance.
The program, which now operates independently of the ABA, sponsors a two-day institute for current and future directors. Twenty-two percent of its alumni now sit on boards of large companies.
Michele Coleman Mayes, chair of the ABA Commission on Women in the Profession, spoke with the ABA Journal about the bill in an email interview. Here are the questions and her answers:
ABAJournal.com: Do you think this bill, if passed, will help boost the number of women on corporation boards? How will increasing the number of women on corporate boards change corporations?
Mayes: The Commission on Women believes that what gets measured gets results. By turning the resources of the U.S. Congress to the issue of board diversity, there is a high probability that public companies will devote more effort to diversifying their boards. We are mindful of the argument that this is an unnecessary intrusion into the board room. On the other hand, the available research shows that public companies with boards that are reflective of the diversity of the population of the United States have better decision making processes and overall stronger organizational health. In other words, diverse boards are good for business and this translates into being good for the economy.
ABAJournal.com: The ABA resolution urges corporate board diversity, while Maloney’s bill focuses on gender diversity. Should Maloney’s bill have required disclosure and study of other kinds of diversity on corporate boards?
Mayes: The commission would certainly support a broader bill, but is also pleased that Maloney has chosen to focus on gender. We know from the report issued by the Government Accountability Office that even if equal proportions of women and men joined boards each year beginning in 2015, it could take more than four decades (or until 2065) for women’s representation on boards to be on par with that of men’s. Letting things take their natural course is not a viable option. Since 2007 the ABA has been formally supporting the increase of women on corporate boards with the founding of the now independent DirectWomen Initiative, which began as a project of the Business Law Section. We know there is a rich pipeline of women ready, willing and able to step into this critical role. It rings hollow to blame the dearth of women directors on a lack of talent. Thus, the bill would start with a population that can be readily tapped.
