Nasdaq Looks to Add Board Diversity and Disclosure Criteria to Listing Requirements
Capital markets technology and exchange company Nasdaq announced today that it has filed a proposal with the U.S. Securities and Exchange Commission (SEC), seeking to require companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors. The proposed rules would also require companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+.
Adena Friedman, President and CEO, Nasdaq, said:
“Nasdaq’s purpose is to champion inclusive growth and prosperity to power stronger economies. Our goal with this proposal is to provide a transparent framework for Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders; we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”
According to Nasdaq, the new proposal aims to provide stakeholders with a better understanding of the company’s current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors. The company cited over two dozen studies that found an association between diverse boards and better financial performance and corporate governance.
Nasdaq’s proposal comes as investors are becoming increasingly aware and active on promoting boardroom and corporate diversity. Earlier this year, State Street Global Advisors informed the board chairs of its portfolio companies that it would begin asking companies to articulate their risks, goals and strategy relating to racial and ethnic diversity, and to make relevant disclosure available to shareholders.
Nasdaq also announced that it will be partnering with Equilar, the leading provider of corporate leadership data solutions, to aid listed companies with board composition planning challenges. The company stated that it will enable companies that have not yet met the proposed diversity objectives to access a larger community of highly-qualified, diverse, board-ready candidates to amplify director search efforts through Equilar’s BoardEdge platform and the Equilar Diversity Network, and by leveraging existing services through the Nasdaq Center for Board Excellence.
Nelson Griggs, President of Nasdaq Stock Exchange, said:
“This proposal and partnership gives companies an opportunity to make progress toward increasing representation of women, underrepresented minorities and the LGBTQ+ community on their boards. Corporate diversity, at all levels, opens up a clear path to innovation and growth. We are inspired by the support from our issuers and the financial community with this effort and look forward to working together with companies of all sizes to create stronger and more inclusive boards.”