All-Male Corporate Boards Are No-Goes For Goldman Sachs
Diversity in the workplace has been proven to improve innovation and financial performance. A BCG study looked at 1700 different companies of varying industry and size across 8 different countries. The companies that have more diverse management teams have 19% higher innovation driven revenue, and the financial world is taking note.
Goldman Sachs CEO David Solomon stated in a CNBC interview from the World Economic Forum that “Starting on July 1 in the U.S. and Europe, we’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women.” Solomon doubled down on Goldman’s stance saying “we’re going to move towards 2021 requesting two.”
In the same interview Solomon asserted that in the last four years, “the performance of IPOs where there has been a woman on the board in the U.S. is significantly better than the IPOs where there hasn’t been a woman on the board.” The numbers tell the full story: a 44% jump in average share price is seen in companies with one diverse board member within a year of going public, a 13% increase in share price is seen in those companies who do not.
Goldman Is Not Alone
The state of California recently introduced a law requiring publicly traded companies to have at least one woman on their boards. This number increases to two women for boards with five members by 2021, and those with six directors must have at least three women. Illinois, Massachusetts, New Jersey and Washington state have all had similar proposals introduced.