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Nasdaq requires companies to disclose board diversity

By Don-Alvin Adegeest

17 Aug 2022


Image: EssilorLuxottica, Politecnico di Milano by Resta Milleri

Nasdaq’s U.S. exchange has implemented a Board Diversity Rule, where all operating companies listed on Nasdaq’s U.S. exchange are required to publicly disclose diversity statistics regarding their board of directors.

The exchange has created a Diversity Board Matrix template which companies will have to file annually. The matrix requires companies to disclose how many of its board members are female, male, non-binary as well as those that did not disclose their gender.

Other categories include disclosing LGBTQ, Native American, African American or Black, Hispanic or Latinx, Asian, South Asian, Pacific Islander, White and Multi Ethnic.

Companies can omit categories that are not applicable to their boards, however Nasdaq’s Diversity Rule states companies should have at least two diverse directors. This new standard in reporting is designed to encourage a minimum board diversity objective for companies and provide stakeholders with consistent, comparable disclosures concerning a company’s current board composition.

Data from ISS Corporate Solutions says women represent hold just 27 percent of board positions, while minorities hold 17 percent. The average age of a board director is 63.

While the requirements for two diverse directors is the bare minimum, it marks a step in the right direction. Diversity should flow top down in a company’s matrix, starting at board level. A report by Deloitte from 2020 says women and minorities are more likely to bring work experience in the areas of corporate sustainability and socially responsible investing, government, sales and marketing, and technology, compared to white males.

Apparel companies listed on the Nasdaq include Lululemon Athletica, Stitch Fix, G-III Apparel Group and Columbia Sportswear.