Goldman Sachs takes a stand on board diversity

4 years ago

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January 24, 2020

Good morning, Broadsheet readers! The Trump administration will restrict visas for pregnant women, Kotex ditches the mystery blue liquid in its commercials, and Goldman sets a quota. Have a wonderful weekend.
– Goldman’s goal. Goldman Sachs CEO David Solomon shook up the World Economic Forum yesterday when he announced that the bank would refuse to take a company public unless it had at least one “diverse” board member.
The initiative will start in July in the U.S. and Europe, Solomon said at the summit in Davos, Switzerland. The initial requirement will be one board member, but the bank will move toward two in 2021. I spoke with him briefly after the announcement; he said, “IPOs are a pivotal moment for firms,” and that diversity in the boardroom “matters for performance.” Solomon said that in the past four years, the public offerings of U.S. companies with at least one female director performed “significantly better” than those without.
It’s worth noting that WeWork was a high-profile culprit of the all-male board trend and that Goldman would have been one of the investment banks to lead its IPO, which was ultimately pulled amid questions related to the co-working space’s valuation and governance.
The U.S. has tiptoed into the boardroom quota trend that’s already reached places like Italy, Germany, and France, but it hasn’t done so via Washington. Rather, California passed a law in 2018 that requires public companies to have at least one female director. But amid the lack of federal action, some influential players in the private sector—a group that now includes Goldman—have introduced measures to nudge companies toward more diversity. Investors BlackRock and Vanguard, for instance, are using their voting power to pressure companies to add women to their boards.
At the World Economic Forum on Thursday, Finland’s new 34-year-old Prime Minister Sanna Marin was asked why gender quotas are needed if the business case for diversity has already been made. “There are people behind businesses,” she said. Therefore, “businesses don’t always work in a logical way.” You can read my whole story on the Goldman news here.
Finally, a quick housekeeping note: Please keep an eye out for a new addition to the Fortune newsletter family, The Broadside. Publishing once a month, it’s focused on giving women the insight and resources they need to get to the next level in their careers.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was produced by Emma Hinchliffe.

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PARTING WORDS

"As a black woman, I make music for people, from an experience that is from a black woman."
-Lizzo, in a Rolling Stone cover story