The shift was attributed to “the widespread racial justice protests that took place last summer.”
Financial institutions, including Goldman Sachs, BlackRock, and Nasdaq, were already under pressure to increase boardroom diversity prior to the protests, driven by a growing body of evidence showing that diverse leadership correlates with better business performance. More than 600 publicly traded companies in California now have at least one female board member as a result of 2018 legislation, according to researchers at Clemson and the University of Arizona.
A better scenario, according to Ms. Akutagawa, is for companies to increase their diversity on their own, without external pressure. “However, results are only as good as their measurement.”
Experts, on the other hand, say significant change will take time. An eight-year term is the average length of a board director’s term, and the cost of adding additional seats can be prohibitive.
The search for directors outside of the “pond” may also be fruitless: In an effort to broaden their diversity, corporate boards have begun hiring directors from outside the C-suite, which is predominantly white and male. It’s true that many companies do not allow their lower-level managers to join outside boards because of the time commitments and potential conflicts of interest, as reported by The New York Times’ DealBook column in February.
According to a Deloitte report, it will take decades for boardrooms to reflect the demographics of the American population if current trends continue. It will take until 2046 for women of colour to make up 20 percent of Fortune 100 board seats, despite the fact that they make up 20 percent of the population in the United States.
Progress has been “painfully slow,” according to the authors of the report.