Goldman Sachs Asset Management (GSAM) announced today that it is boosting its board diversity requirements for companies, introducing updated proxy voting policies will see the company voting against boards that do not meet its gender and ethnic representation expectations.

Under the updated policy, GSAM said that beginning in 2022, it will expect portfolio companies in the S&P 500 and FTSE 100 to have at least one diverse director from an underrepresented ethnic minority group, and that it will expand its expectations for public companies with 10 or more board members to have at least two women on the board.

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GSAM stated that it will vote against members of the nominating committees that do not meet these expectations, and that it will continue to vote against all members of boards in the U.S. that do not include any women.

Heather Miner, Chief Operating Officer of Goldman Sachs Asset Management, said:

“Our approach to stewardship is grounded in Goldman Sachs’ focus on advancing sustainability and inclusive growth. These latest enhancements to our voting policy will keep Goldman Sachs Asset Management at the forefront of driving greater diversity and inclusion on boards around the world.”

The new policy comes as companies are facing increasing pressure from shareholders to improve performance on sustainability issues, with diversity, equity an inclusion (DEI) as one of the key focus areas. A recent study from professional services firm EY found significant growth in shareholder proposals on ESG issues including climate and DEI, as well as record levels of support for the proposals throughout the 2021 proxy season.

Katie Koch, co-head of the Fundamental Equity business within Goldman Sachs Asset Management, said:

“Boardroom diversity is an important source of diverse thinking at the highest level of every company and is an important driver of corporate performance. We have continued to increase our expectations with respect to boardroom diversity as momentum behind more stringent requirements continues to grow.”

GSAM said that its updated policy aligns with its stewardship team’s broader engagement efforts to encourage sustainable and inclusive corporate behavior that it believes drives strong performance for shareholders. The company also aims to engage with companies on diversity efforts at all organizational levels, and will encourage companies to disclose workforce diversity by gender, race, and ethnicity.

Catherine Winner, head of stewardship for Goldman Sachs Asset Management, said:

“Our proxy voting policies allow us to create a stronger framework for the companies in which we invest on behalf of our clients. We see active proxy voting and engagement on diversity and other issues as a critical part of our role as stewards of our clients’ capital.”