House Passes Corporate Diversity BillBy
The U.S. House of Representatives passed the Improving Corporate Governance Through Diversity Act of 2019 (H.R. 5084) by a bipartisan vote of 281-135 in November 2019. The bill requires annual reports to include new information on gender, race, ethnicity, and veteran status of members of boards of directors and nominees and senior executive officers.
Sen. Bob Menendez (D.-N.J.), who introduced a companion measure (S. 360) in the Senate, feels it’s unlikely that the Senate will follow suit. “While I’m not optimistic the Republican majority will allow us to vote on this critical legislation, I will continue to work to advance my version of this bill in the Senate,” Menendez said in a statement to Strategic Finance. “There is a diversity problem in our nation’s top performing companies. We could start addressing this issue by passing this bill and finally making diversity a deliverable, not just a buzzword in corporate America.”
The bill would also establish a diversity advisory group at the U.S. Securities & Exchange Commission and require the agency’s Office of Minority and Women Inclusion to publish best practices for compliance with diversity reporting.
The bill has the support of the National Association for the Advancement of Colored People (NAACP) and the National Urban League as well as from the U.S. Chamber of Commerce and the Council of Institutional Investors. In a letter to the House sponsor in January 2019, the U.S. Chamber of Commerce wrote: “The ‘Improving Corporate Governance Through Diversity Act of 2019’ would establish a model to organically boost diversity on boards, rather than the counterproductive quota-driven strategies that some jurisdictions have attempted.”